Macroeconomic Policy Notes

Macroeconomic Policy Notes - Macroeconomic Policy Notes...

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Macroeconomic Policy Notes Class 2 : 2011-01-11 , Command : KarlMarx (1818-1883) freemarket economies Begenning with the soviet union in the 1920’s many countries inspired by Marx, adopted socialist/communist systems… By the last few decades of 20 th century these countries were not able to provide their citizens with the rizing living standard that existed in freer market and mixed economies. In the last two decades of the 20 th century most communist/socialist governments replaced their systems of central planning to much freer markets. All this because they were not efficiently organized. Market systems are considered more efficient than Command but market systems are considered les fair in income distribution. (18-19) Market : The vast majority of our everyday actions are motivated by self-interest not benevolence. This is the foundation of economic order. These idieas come from Adam Smith (1723-1790). The wall street view that “ Greed is good”! Get education and learn how to steel like a real man !! Acceptance of the free market over central planning does not provide an excuse to ignore a country’s social issues. Number one reason for the debt in the states is unability to pay for the healthcare insurance. Myeconlab for the multiple questions for exams!! Mixed: Market failure occurs when the market does not operate in a way that uses resource efficiently or is fair for society as a whole. Effect: Sometimes government action is nessacery to correct market failures. Some examples are -regulating some industries—taxing alcohol) -subsidizing others---healthcare education) -directly provide some public goods and services) -assume ownership---hydro-quebec) -offset the effects of externalities---pollution) Chapter 2 (23-31) Microeconomic is the study of individual people and businesses and the interaction of those decisions in markets. Macroeconomics is the study of the economy as a whole. It seeks to explain the general price level (inflation, deflation), employment and unemployment, total production and the rate of economic growth. Positive statements are about what is, what was, what will be. - Can be tested and proved right or wrong - Is done empirically/scientifically by checking them against the facts. Ex: taxes will increase for all Canadians this year. Does outsourcing by these firms raise or lower incomes in their home countires? Normative Statements are about what ought to be. -depend upon personal values (value judgments) -cannot be tested empirically/scientifically
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Ex: we ought to reduce our use of carbon-based fuels.Should we limit outsource? Economist use the scientific method to understand the world. Economiscs is a social science. All social science use the scientific method: Economist apply the scientific method to systematically study economics problems by gathering relevant facts to obtain economic theories that may be used to formulate policies that will solve further economic problems. 1.
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This note was uploaded on 02/27/2012 for the course BUSINESS 101 taught by Professor All during the Spring '09 term at McGill.

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Macroeconomic Policy Notes - Macroeconomic Policy Notes...

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