New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Chapter 2 - 3/30/16 - Thinking Like an Economist

by: Julia List

Chapter 2 - 3/30/16 - Thinking Like an Economist ECON 222 001

Marketplace > California Polytechnic State University San Luis Obispo > ECON 222 001 > Chapter 2 3 30 16 Thinking Like an Economist
Julia List
Cal Poly
GPA 3.15
View Full Document for 0 Karma

View Full Document


Unlock These Notes for FREE

Enter your email below and we will instantly email you these Notes for Principles of Macroeconomics

(Limited time offer)

Unlock Notes

Already have a StudySoup account? Login here

Unlock FREE Class Notes

Enter your email below to receive Principles of Macroeconomics notes

Everyone needs better class notes. Enter your email and we will send you notes for this class for free.

Unlock FREE notes

About this Document

Chapter 2 notes of "Brief Principles of Macroeconomics, 7th edition" by Mankiw. Covered in Lecture during weeks 1 and 2. Key concepts: definition of firms and households, circular flow diagram, pro...
Principles of Macroeconomics
Class Notes




Popular in Principles of Macroeconomics

Popular in Department

This 2 page Class Notes was uploaded by Julia List on Monday May 2, 2016. The Class Notes belongs to ECON 222 001 at California Polytechnic State University San Luis Obispo taught by Fisher in Spring 2016. Since its upload, it has received 7 views.


Reviews for Chapter 2 - 3/30/16 - Thinking Like an Economist


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 05/02/16
Thinking Like an Economist (Chapter 2) – Lecture Notes 3/30/16  The Economist as a Scientist o Economists play two roles:  Scientists- try to explain the world  Policy advisors- try to improve it o Scientific method- dispassionate development and testing of theories about how the world works  Ethical philosophy  Example of coal powered power plants in ohio o Mother earth vs. poor people who need energy (bad housing, less insulation)  Normative statement (go by the norms) – value statement  Assumptions and Models o Assumptions simplify the complex world o Example: to study international trade, assume two countries and two goods  Unrealistic but easy to learn and give insight o Model – simplified representation of a complicated reality- the deep logic  Ex: Road map, model of human anatomy, model airplane o Circular Flow Diagram- visual model of the economy shows how dollars flow through markets Firms Households -Buy/Hire factor of production, use them to produce -own the factors of production (labor, goods and services infrastructure, firms), sell/rentthem to firms -sellgoods and services for income -buy goods and services  Every dollar goes around roughly 6 times  Firms and households are interdependent  *Money on outside o Nominal- in name, money paid through a checking account  Exports/Imports and Government left out  Macroeconomic Facts o USA produces 18 Million per year in goods for final demand o 2/3 of income accrues to workers o 1/3 of income accrues to owners of capital o 1/5 of world in economic power  Second Model- Production Possibilities Frontier (PPF) o Two goods: computers and wheat o One resourse: labor o Economy has 50,000 labor hours per month available for production  Each computer takes 100 hours to make  Each ton of wheat takes 10 hours to make  Price of a computer is ten times the price of a ton of wheat o PPF Example: Wheat and Computers Production 6000 computers wheat 500 0 4000 400 1000 2000 250 2500 0 100 4000 0 100 200 300 400 500 600 0 5000 o Inside region possible (not efficient), outside region not possible o Slope=price wheat/computer=10  Human creativity makes us better at making computers or wheat, brings line further from origin!  Higher slope=steeper line= higher opportunity cost = more expensive o Opportunity cost of an item is what must be given up to make that item o Economic growth- human creativity- PPF outward o If PPF is a parabola (bowed out)- easier to do something in the middle than an extreme- as you specialize in making one resource, it gets harder to make the other  Microecon vs Macroecon o Microeconomics- individual, firm. Study of how households and firms make decisions and how they interact in markets o Macroeconomics- the study of economy wide phenomena including inflation, unemployment, and economic growth.  Positive vs normative o Positive statements- economists make scientific statement s to describe the world as it is o Normative statements- economics act as policy advisors to prescribe how the world should be  Statement of value 


Buy Material

Are you sure you want to buy this material for

0 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Anthony Lee UC Santa Barbara

"I bought an awesome study guide, which helped me get an A in my Math 34B class this quarter!"

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.