lectur2-page34 - importance of an educated citizenry to the...

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You will notice a line drawn between Step 4 and Step 5. What do you think the significance of this line is? Well, if you have been reviewing your notes and studying, you may have a good idea. Think for a second before you go on. Remember our discussion of positive and normative economics? Positive economists at the macroeconomic level stop at Step 4. This is the point that economic analysis is handed over to the politicians or policy analysts to select and implement a solution. Politicians and policy analysts make the normative judgements that they are elected or hired to make based upon the economic analysis and the preferences of the public that they serve. This is the way macroeconomic policy decisions are made in a representative democracy. I also hope you realize the
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Unformatted text preview: importance of an educated citizenry to the survival, and peaceful continuance of a representative democracy. You theoretically “call the shots” in the long run through the voting process. One of our responsibilities as citizens is to “take care of business”, not “have business taken care of for us.” What about at the microeconomic level? Well, there you are the positive economist and the normative decision-maker. When you own and operate your own business, you are the one “calling the shots”. What choices will you make? What tough choices will you have to make? Well understanding economics will hopefully help you learn the processes to use in making your choices. Some have even referred to economics as the “science of 34 making choices.”...
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