Intro Economics Survey Course
Intro Economics Survey Course ECON 201
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This 7 page Class Notes was uploaded by Kelsi Adams I on Monday October 26, 2015. The Class Notes belongs to ECON 201 at University of Tennessee - Knoxville taught by Kenneth Baker in Fall. Since its upload, it has received 16 views. For similar materials see /class/229886/econ-201-university-of-tennessee-knoxville in Economcs at University of Tennessee - Knoxville.
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Date Created: 10/26/15
WHAT IS ECONOMICS Why are you here OVERVIEWQUESTIONS OF THE DAY El When does it cos when you make a decision a Whor doex ix ox for you ro go ro xdiool n Should rhe governmem have bailed oiinhe ouro induxlry u Where do prices come from n Why do we have Ihem Why con39i everylhing iiisr be free a How much does he Uniled Slules produce 2 n Whor exadly ix o reexxi o Why is rhe us such a rich ounlry Where does inlloiion come from a n Ix i really all quot1039 bad a When do all iliese quesiionsissues have in common SOCIETY S 2PART PROBLEM gt Economisis see on irreconcilable problem wiili ilie world Human a one of ihe moxl fundamemal economic omimpiiom n More ix alngx bener 2 Unforiunoiely our a biliiy lo a Anoiher fundamemal economic omimpiion u The mwe need io make ihe goodx and xervkex ihoi xalixfy our wank ore Society s 2puri problem com 0 Resources aka faclors of produclion inpuls Raw Malelials land coal Iimber xleel waler foxin fuelx ek Labor Physical Capilal Human Capilal experience Iraining educalion of labor force Enlrepreneurship ability ro organize rne olher inpulxlo lake rne rixkx Technology rne melhod of running inpqu inro onrpm SCARCITY a Searcin is lhe economic problem B Your lime is scarce a only B Your income is scarce only a Governmenl revenue is scarce I On a Resources are scarce and as a resull lhere is nol enough lo salisfy everylhing lhal people wanl n we have a limired pile of rexollrcex ro work wilhwhih meanx we can much only do no 3 QUESTIONS FOR SOCIETY 1 When n I How many 2 How ro make lhe goodsservices n Whar ix rhe bexl ombinalion of inpqu lo make rhe goodxervice n thh combinalion ix lhe moxl efficient 3 How do we Mme goodsservices lhal we do make I How do we divide up me goodx Ihalwe have madei ECONOMICS AS A SOCIAL SCIENCE u Normative vs Positive Language D Normalive vemtnent shuuld The gDvErnmem shuuld D Posilive n omemed with n enlered ground lttne government tnrreused We mlmmum wage by lonn unemplnymem WlII rlse by 2 Normative 0r Positive nt e government prints oo much money itcauses i Me n t inflat on a rise in the general price ofgoodsservices r o The Fed shouldleave interest rates alone in their next meeting Our reliance on fossil fuels is causing global warming The government should encourage alternative means of energy use away from fossil fuels wings es MICROECONOMICS vs MACROECONOMICS u M roeconom cs n the xludy D Mucroecono s a of how the aggregate of in iv liouielioldi firmx and governmem Microeconomics 3 Main Economic Agenisquot Microeconomics studies iheir behavior and It also studies he Macroeconomics ll Level of Produeiion I How anwe meexiiie an eniire tountry39x ioial level of produdion a How ix tliix level of produdion relaled u Slandurd of Living I Who affedx a tountry39x W n Cosi of Living a Who ix Ihe text of livingquot and how ix it meaxured ll Governmenl Policies Micro 01 Macn u and output of com Howwill the Fed s increase of shortrterm interest rates atreet the country39s savings ia 7 c Howwill uncertainty in the Middle East atreet the price of crudeoil and gasoline ASSUMPTIONS THEORIES AND MODELS D Assumpj ons a Complex r by far me biggexl problem eonomixlx ne a Therefore rilkal fim xlep involvex ximplifying me problem ro that e pankular problem being xiudied an be ixolaled B Chen o xubiedive proexx whkh an lead to dixagreemenlx between eonomixlx 1 Common eonomix axxumplionx rms peopbrrrms Assumptions theories and models cont D Theories is often baxed on x imple obxervalion whenvonob eA mtreoses nun n Theoriex anempno u Example I Home Ihalwhen PM Jrlhen Qbeg punhaxed T Assumptions theories and models cont u Models quumimnve representations of u Models allow guunmmive prediaions u Example When PM wL by 5 QM T by10 ECONOMICS WHAT IS IT a The social science that studies production distribution and consumption of goods onol seryices El The branch of knowledge concerned with the production consumption and transfer of wealth Oxford Dictionary u The study of how society a The sruoly of how people make choices under conolirions of scarcity and of the Definllion Conl D What do all of these definitions mean a Scarcity Choices Optimize Efficiency El 30qu Lin a Things are score time money resources so we need to do the best with what we have to work wit u Who Do Economisls Do u Economics is clearly a broad topic that can be applied to an increoliloly wide range of soloiecis 1 Poverty Pollution Health care lj Where do economis1s work l Academia n Teach xiiiaenrx ihe Ioolx to think economically abom decixionmaking 2 Private Sector i Financial induxlry ax onxullamx 3 Public Sector a Federal xlale and local governmenlx analyzingweighing policy Key Conc gets and TQWWE Positive vs Normative Language Key ideas a oeiety s 2 39r y r the amount of goods and servics that would fullysacisfy everyone Microeconomic yamines the behavior of individual decisionrmakers Macroeconomic examines the aggregate outcome of many individual decisionrmakers Assumptions serve to Slmply a problem before yamined Theories prov de a ausal relationship between variables while models allow for quantltatlve predictions gt The World Bank defines those liVing extreme as those liVing on 1 r da gt Began In their 1990 World Development Report and is now Widely reported as some kind of official benchmark gt Both the total number of people worldWIde and the percentage of people sunWing on 1 per day or less has steadily decreased since I 990 gt The total number reached less than 1 billion for the first time in 2004 k