MacroI-3-2 - Macroeconomics Dr.Safarzadeh Introduction...

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Macroeconomics Introduction Chapter1 Chapter2 Chapter3 Dr. Safarzadeh
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Introduction What is Economics? Economics is Concerned with Optimum  Allocation  of  Limited Resources  Among  Unlimited Wants . What Are Economics Resources?  Economics Resources or Factors of Production are:  Labor  Land  Capital  Entrepreneur
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Introduction Normative Economics: Statements Based on Value Judgment and Personal Norms.   The way Things Should be (Based On our Own Value  Judgment). Positive Economics: Statements   Based on Fact, Data, The Way Things Are. Microeconomics:    Study of Individual Economic Units.  Topics  such as consumer behavior or theory of firm. Macroeconomics:    Study of the economy as a whole or at the  aggregate level.  The topics of interest in macro-economics are  inflation, unemployment, GDP growth, the role of government,  and the Fed.
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Introduction Three Main Objective of Every   Economy:  Full Employment  Stable Prices   Economic Growth Conflicting objectives:   Full Employment and                                 Stable Price Complementary objectives:   Full employment and                                                  Growth Have We Achieved These Objectives? No. US Economy has always faced either inflation, or Unemployment, or Both. Why? Because Not All Three Objectives are Complementary.
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Introduction Three Main Macroeconomic Economic Variables:  Unemployment  Inflation  GDP Have we achieved the three main objectives of Full Employment , Stable Prices , and Economic Growth ? A Look at Historical Data:
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Introduction Unemploymen t
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Introduction Inflation
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Introduction CP I
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Introduction Real GDP
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Introduction Business Cycles:
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Introduction Business Cycles: Systematic Ups and Downs of Economy, measured by changes in GDP. Four Stages of A Business Cycle:  Peak, Trough,  Expansion, Recession Can We Predict Business Cycles?   Why Worry about Low Unemployment?   Tight job market leading to higher wages  Recession:   Two Consecutive Quarters of Decline in GDP NO
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Economics:    Basic Assumptions - Basic Tools Basic Assumptions:     Rational Economic Behavior Self- Interest , and  Maximizing Principles :   Economic agents,  Households, Firms, and Government are Assumed to be Rational  and Behave Rationally.  Objectives Derived from Theses  Assumptions Are: Households:  Maximize Utility  Firms:            Maximize Profit  Government: Maximize Votes. Basic Tools:
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MacroI-3-2 - Macroeconomics Dr.Safarzadeh Introduction...

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