101-2011-L6

101-2011-L6 - Econ 101 Lecture 6 Consumption and Leisure...

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Unformatted text preview: Econ 101 Lecture 6 Consumption and Leisure Decisions n No class on Monday What to read n Williamson, chapter 4, pp. 102-116 (today) n Williamson, chapter 4, pp. 116-123 (next Wednesday) Consumption From measuring to modelling n It’s time to construct models of the economy and use them as laboratories to understand and predict macroeconomic events n e.g. what happens if n Government implements a stimulus package n Government changes taxes n Productivity changes Where are we? n Measurement of Economic Activities n A static model of the economy n Economic Growth n A dynamic model of the economy n Business Cycles Consumption, work and leisure n Why is this important? n Need to work if you want to buy consumption goods n Would rather not work and enjoy leisure n We call this a trade-off : while people desire both consumption and leisure, they cannot have plenty of both, on average. n Preferences and Constraints n Preferences define what one would like to do n Constraints define what one can and cannot do Introducing your new best friend § A useful principle in macroeconomics: under certain conditions the average behavior of all consumers is exactly the behavior of the average agent economy...
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This note was uploaded on 12/26/2011 for the course ECON 101 taught by Professor Dumbass during the Fall '08 term at UCSB.

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101-2011-L6 - Econ 101 Lecture 6 Consumption and Leisure...

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