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aChapter1Spring2011 - ECN 211 ECN PRINCIPLES OF...

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Unformatted text preview: ECN 211: ECN PRINCIPLES OF MACROECONOMICS PRINCIPLES SPRING SEMESTER, 2011 10:30 AM (SLN ) [email protected] SLN 11870 1:30 PM (SLN) [email protected] SLN 14006 Blackboard Web Site: http://myasucourses.asu.edu http://myasucourses.asu.edu Or access from: http://my.asu.edu 1 INSTRUCTOR INFORMATION INSTRUCTOR Name: Dr. Jerry Kingston Office: Computer Commons Office: 415-J 415-J e-mail: [email protected] e-mail: [email protected] [email protected] Office Hours: TTH 8:30 to 9:30 Wednesday 9 to 2 PM Wednesday 2 TEACHING ASSISTANT INFORMATION INFORMATION Office Hours & Loczations: Kwan Shin Choi – CC 415B Monday 11 – 12 Tuesday 8 – 3 Tuesday Zhan Li – CC 425A Zhan Monday 8 – 11 and 12-5 Daniel Lawver – CC 415D Wednesday 8 – 12 Thursday 8-12 Thursday Note: CC is Computer Commons Bldg. Note: 3 BASIS FOR COURSE GRADES BASIS Midterm 1: Midterm Midterm 2: Midterm 3: Final Exam Final EQUALS EQUALS 100 points 100 100 points 100 points 100 100 points 400 points Less lowest Score -100 points from above from EQUALS Maximum of 300 points Note: Students are NOT required to take the final exam if they are satisfied with their grade based on 3 midterms. A set of “pregrade final” course grades will be posted. 4 GRADE DISTRIBUTION A 264 to 300 points (88% to 100.0%) B 225 to 262 points (75% to 87.4%) C 180 to 224 points (60% to 73.4%) D 150 to 179 points (50% to 59.4%) E 0 to 149 points (< 50%) to Note: The instructor reserves the right to Note: lower the grading standard, but will not raise it. A “pre-final exam” set of grades will be posted prior to the final exam. posted 5 COURSE PROCEDURES COURSE Format: Primarily lecture Attendance: strongly recommended Attendance: Question and answers at beginning Question of each class meeting on previous lecture. Exams: Exams All exams are Multiple Choice All Three midterms (33 Q) + final exam Make-up exams given only if/when: Make-up Due to university-required absence; Due OR when the student has already missed one exam (for any reason). missed 6 WITHDRAWAL WITHDRAWAL INFORMATION: 1. Weeks 1-10: Unrestricted. (W) 1. Weeks A. In-person: April 8 B. On-Line: April 10 2. 2. Weeks 11-15: Weeks Restricted Complete Withdrawal (W only if student withdraws from all classes and request is approved by the undergraduate dean of the W.P. Carey School). Approval also Carey required from Registrar’s office. required 7 STUDY AIDS FOR COURSE STUDY 1. Text: Irvin B. Tucker, Text: Macroeconomics for Today, 6th Macroeconomics edition. 2. 2. Lecture slides Lecture 3. 3. Instructor Commentaries 4. Chapter Review Questions Chapter 5. 5. Review Sheets for Midterm Exams Review 6. 6. E-mail access to instructor and TA 7. Office hours (instructor and TA) 8. Audio/video recordings of lectures. 8 CONNECTING TO BLACKBOARD CONNECTING 1. Go to http://myasucourses.asu.edu Go OR go to: http:my.asu.edu. OR 2. Select: ECN 211 3. Check announcements and then go to 3. Course Documents. A. Syllabus A. B. Lecture slides B. C. Instructor Commentaries C. D. Chapter review questions E. Review sheets for midterm exams F. Answer to examinations G. Grade reports G. H. Audio/video recordings of lectures H. 9 OTHER HOUSEKEEPING ISSUES (see syllabus) (see 1. Final exam dates: Final 10:30 AM Class: Tuesday, 05/10 at 9:50 AM 10:30 1:30 PM Class: Tuesday, 5/20 at 12:10 PM 1. Three ID numbers (ASU, affiliate, and Three posting): which do I need? (Go to http://my.asu.edu and hold the cursor over http://my.asu.edu your name to see your posting ID) your 2. Plus or minus grades (not assigned) 3. Services for students with disabilities are Services available. available. 4. Class attendance. 10 HOW SHOULD I STUDY? 1. Read the syllabus 2. Read the assigned chapter. 3. Print the lecture slides 4. Come to class everyday 5. Read the instructor commentary 6. Work the chapter review questions 7. Ask questions: in class or at Ask [email protected] [email protected] 8. 8. Review the lecture given in class. Review 9. 9. DO WELL EARLY. 11 CHAPTER 1 IINTRODUCING THE NTRODUCING ECONOMIC WAY OF THINKING THINKING SPRING, 2011 12 ANNOUNCEMENTS ANNOUNCEMENTS 1. Syllabus summaries available. 1. 2. Video recording of introductory 2. lecture not available. lecture 3. Teaching assistant office hours are 3. available. available. 4. Today: Chapters 1 and 2 13 TEACHING ASSISTANT INFORMATION INFORMATION TA Office Hours Kwan Shin Choi – CC 415B Monday 11 – 12 Tuesday 8 – 3 Tuesday Zhan Li – CC 425A Zhan Monday 8 – 11 and 12-5 Daniel Lawver – CC 415D Wednesday 8 – 12 Thursday 8-12 Thursday 14 THE CONCEPT OF SCARCITY SCARCITY The basic economic problem: Unlimited wants Limited resources Limited Whose problem is it? (everyone’s!!) Individuals Families Families Nations The world Facts: the problem cannot be Facts: avoided. The best we can do is to (1) fully utilize the resources we have; (2) use them efficiently; (3) increase them over time; and (4) promote technological change. technological 15 HOW ARE ECONOMIC RESOURCES CLASSIFIED? RESOURCES Property Resources: Property Land (natural resources) Capital (Man-made resources) Human Resources Human Labor Labor Entrepreneurship Entrepreneurship How does the resource base grow? Changes in amounts. Changes in quality. Changes Technological change. 16 SCARCITY REQUIRES CHOICES! CHOICES! Choices in production What to produce? How to produce it? Choices in distribution Choices distribution For whom will the output be For produced? produced? How are these choices made? Tradition Command The market 17 TYPES OF ECONOMIC ANALYSIS ANALYSIS Microeconomics Microeconomics Puts the economy “under the Puts microscope” to study individual markets individual Macroeconomics: The study of the overall The economy economy Total productive capacity Extent of capacity used Growth of capacity Inflation Balance of Payments 18 WHAT DO ECONOMISTS DO? DO? 1. DESCRIPTIVE ECONOMICS 1. A. Gather and organize data. 2. 2. BUILD ECONOMIC MODELS BUILD A. To predict economic outcomes outcomes B. To explain why they occur. B. 3. 3. ECONOMIC POLICY ECONOMIC A. Policies to change economic outcomes 19 POSITIVE VS. NORMATIVE ECONOMICS ECONOMICS Positive economics emphasizes “what is” A. Description B. Model building B. Normative emphasizes “what Normative ought to be” A. Economic policy is A. “normative” “normative 20 HOW TO BUILD AND TEST AN ECONOMIC MODEL AN 1. Identify the problem. Identify 2. 2. Gather the data Gather 3. 3. Estimate relationships among Estimate important variables. 4. 4. Evaluate the model: Evaluate A. Is it logical? A. B. Does it explain? C. Does it predict well? D. IS I PREFERABLE ON THE D. ABOVE CRITERIA TO ALL OTHER MODELS? 21 PITFALLS IN ECONOMIC THINKING THINKING 1. The Ceteris Paribus assumption: All other things equal All 2. Association vs. causation: 2. the post-hoc fallacy 3. The fallacy of composition: 3. Reasoning from the part to the whole 4. Unintended consequences 22 APPENDIX: DEPICTING RELATIONSHIPS AMONG ECONOMIC VARIABLES ECONOMIC Economic theory involves Economic hypotheses about relationships between or among variables Hypotheses may be depicted in Hypotheses a number of ways: Verbal statements Verbal Tables of numbers Equations and graphs Each is illustrated on the Each following pages following 23 VERBAL STATEMENTS VERBAL The quantity of pizza demanded The declines as the price of pizza rises, all other things equal other The direction of the relationship is The specified. The magnitude of the relationship is The not specified. The hypothesis is difficult to test in The its present form its 24 MATHEMATICAL RELATIONSHIP EXPRESSED IN A TABLE EXPRESSED Price Quantity Demanded Quantity $25 $25 $20 $15 $10 $05 $00 00 per week 05 per week 10 per week 15 per week 20 per week 20 25 per week This shows more precisely how the This quantity demand changes as the price of pizza changes, all other things = . of 25 MATHEMATICAL RELATIONSHIP EXPRESSED IN AN EQUATION EQUATION Price $25 $20 $15 $10 $10 $05 $00 Q(d) = 5 - .2(P) Q(d) Quantity Quantity 0 per week per 1 per week 2 per week 3 per week per 4 per week 5 per week per Note: We could fill in values for Note: $12.00, $18.00 and any other value between $25 and $0 and estimate the amount of pizza purchased. 26 GRAPH OF THE EQUATION GRAPH Assumes all other things equal. Price of Q(d) = 5 - .2(P) Pizza 25 0 5 Quantity of Pizza/wk 27 A DIRECT (POSITIVE) RELATIONSHIP BETWEEN VARIABLES, P. 21 VARIABLES, Figure 1A.1 AN INDIRECT (NEGATIVE) RELATIONSHIP BETWEEN VARIABLES, P. 23 VARIABLES, Figure 1A.2 AN INDEPENDENT (NO) RELATIONSHIP BETWEEN VARIABLES, P. 24 VARIABLES, Figure 1A.3 AN NEGATIVE RELATIONSHIP BETWEEN VARIABLES, P. 23 VARIABLES, Figure 1A.2 MEASURING THE SLOPE OF AN NON-LINEAR FUNCTION, P. 25 FUNCTION, Figure 1A.4 MEASURING THE SLOPE OF AN NON-LINEAR FUNCTION, P. 25 FUNCTION, Figure 1A.4 SHIFTS OF A FUNCTION: CHANGES IN PRICE, QUANTITY AND INCOME, P. 27 P. P(x) Annual Income = $60,000 Annual income = $30,000 D2 D1 Q(X) 34 CHAPTER 1 HIGHLIGHTS CHAPTER 1. 2. 3. 4. 4. The basic economic problem. The production problems The distribution problem How these problems are resolved. resolved. 5. Economic resources 5. 6. Macro vs. microeconomics 6. 7. What do economists do? 8. Building and testing economic 8. models models 9. Positive vs. normative 9. economics economics 10. Relationships between 10. economic variables. 11. Errors in logic 11. 35 END END 36 ...
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