Course Lecture Notes - Week 1

Course Lecture Notes - Week 1 - WEEK ONE Instructor...

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WEEK ONE Instructor Lecture: Nature of Economics Content Author: Dr. Basma Bekdache This week we begin our introduction to the exciting world of economics. By the end of this semester, you will be able to read the daily economic news and understand what it means, how it impacts you, and how to analyze it using the economic way of thinking. You may even be able to make a prediction using one or more of the economic models that you will learn in this course! The first thing we have to do before we study a new subject matter is to introduce its language so that we are all on the same page. The language of economics includes several terms that you may also encounter in other disciplines, and some that will be unique to economics. In this lecture, we will discuss and define a number of concepts, which will be used throughout the semester and that are central to the study of economics. First and foremost let's define what economics is all about. What is Economics? Economics can be defined as the study of how we allocate scarce (or limited) resources to satisfy unlimited wants. It is the study of how people make choices . Resources are things that we use to make goods and services that people want. Examples of resources are: Time Materials Labor hours Land Capital Oi l Et c.
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Why do people have to make choices? That's right, we have to make choices because resources are limited or scarce. Think of the resource time. What kind of choices do you have to make everyday to satisfy your wants given your limited time? In making choices people respond to incentives , which are the rewards we receive when we choose to engage in particular activities. Macroeconomics and Microeconomics We can think of economics as consisting of two major branches: Macroeconomics and Microeconomics. Macroeconomics (macro for short) is the study of the economy as a whole or economic aggregate. Can you think of examples of topics that fall under the subject of macroeconomics? Correct. The unemployment rate, inflation, interest rates, the government budget deficit or surplus, and GDP (Gross Domestic Product) are all examples of topics that we study in macroeconomics. Microeconomics (micro for short) is the study of specific markets, individuals, and firms in the economy. A few examples of microeconomic topics are: What determines the demand and supply for cars or pizza? How does an individual decide how much time to spend working or taking vacation? How does a business decide how much to produce? We will see later as the semester progresses that often times, we need to blend Micro and Macro analyses in order to answer some questions about the economy. For example, to understand what determines the amount of jobs available in the economy, or unemployment, we use a demand and supply model of the labor market along with an aggregate demand and aggregate supply model of the aggregate economy's level of production.
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WEEK ONE Instructor Lecture: How Do We Study Economics? Content Author:
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Course Lecture Notes - Week 1 - WEEK ONE Instructor...

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