ch02-presentation(FA2010)_posted

ch02-presentation(FA2010)_posted - Lecture2 THINKINGLIKE...

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Lecture 2 THINKING LIKE THINKING LIKE AN ECONOMIST AN ECONOMIST Please read ch.2 p. 21 to 25 and  Please read ch.2 p. 21 to 25 and  p. 28 to 36. p. 28 to 36. THINKING LIKE AN ECONOMIST 1
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In this chapter,  In this chapter,  look for the answers to these questions: look for the answers to these questions: What are economists’ two roles? How do they differ? What are models? How do economists use them? What are the elements of the Circular-Flow Diagram? What concepts does the diagram illustrate? What is the difference between microeconomics and macroeconomics? Between positive and normative statements? 2
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THINKING LIKE AN ECONOMIST 3 Microeconomics and Macroeconomics These two branches of economics are closely intertwined, yet distinct – they address different questions. Microeconomics is the study of how households and firms make decisions and how they interact in markets (occasionally government policies are studied to see how they would affect the market outcomes –prices and quantities-). Macroeconomics is the study of economy-wide phenomena, including inflation, unemployment, and economic growth.
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THINKING LIKE AN ECONOMIST 4 The Economist as Scientist Economists play two roles: 1. Scientists: try to explain the world 2. Policy advisors: try to improve it In the first, economists employ the scientific method , the scientific method applied to macroeconomics can be divided in 3 steps measurement conjecture of a theory validation and falsification of the theory
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THINKING LIKE AN ECONOMIST 5 Assumptions & Models Assumptions simplify the complex world, make it easier to understand.
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This note was uploaded on 03/02/2011 for the course ECON 001 taught by Professor Stein during the Fall '07 term at UPenn.

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ch02-presentation(FA2010)_posted - Lecture2 THINKINGLIKE...

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