Class Notes - 9-5-07

Class Notes - 9-5-07 - o Trade-offs o Models will predict...

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Macroeconomics – Class Notes – 9/5/07 THINKING LIKE AN ECONOMIST - MICRO VS. MACRO o Microeconomics: “Individual parts of economy” o Macroeconomics: “economy as a whole” Unemployment rate How quickly prices are rising (inflation) Long term growth National trading patterns Rhythm of economic activity (expansion, recession) - ECONOMICS as a SOCIAL SCIENCE - SOCIAL SCIENCES - o Assumptions – hypothesis – test o Theory is the heart of the hypothesis WE ALL USE THEORY - SODA MACHINE o You don’t have to know the workings of the machine to test a theory - PARTY LINES - PARTY NOW/GET UP EARLY & DO PAPER - Simple theories do work DO WE BUY MORE WHEN PRICE IS LOWER? Demand is weather dependent CIRCULAR-FLOW DIAGRAM (See book) MODEL II: PRODUCTION POSSIBILITIES FRONTIER - Shows all combos of 2 goods given: o Technology o Resources o Fully and efficiently used
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Shows… Efficiency Tradeoffs Opportunity cost Economic growth ROLES OF ECONOMICS Scientists… and policymakers
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Unformatted text preview: o Trade-offs o Models will predict possible trade-offs Values will shape decision POSITIVE VERSUS NORMATIVE (Statements) • Positive statements: descriptive & analytic • Normative statements: reflect individual opinions o Should/shouldn’t o Ought/Oughtn’t • Example: A rise in the minimum wage raises unemployment o This is a positive statement • 84 50 DD 1.40 2.7 13 20351 53 51 51 -1 = Stock ticker o 84 and 50 52 week high and low o DD Ticker Symbol o 1.40 Dividend o 2.7 Yield o 13 PE Ratio o 20351 Volume of shares traded in 100’s o 53 51 51 53 Highest price for the day 51 Lowest price for the day 51 Closing price for the day o-1 Total change • (Dividend) / (Closing stock Price) * 100 = ($1.40) / ($51.00) * 100 = 2.7% (Yield) • (Closing price of the stock) / (Earnings) (P / Earnings per share) = 13 (P.E Ratio)...
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This note was uploaded on 04/15/2008 for the course ECON 101 taught by Professor Golden during the Fall '07 term at Allegheny.

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Class Notes - 9-5-07 - o Trade-offs o Models will predict...

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