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Lecture1 - Introduction to Macroeconomics Ryan W Herzog...

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Introduction to Macroeconomics Ryan W. Herzog Spring 2014 Ryan W. Herzog (GU) Chapter 1: Introduction Spring 2014 1 / 24
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Outline 1 Economics and three Pitfalls 2 Efficiency and Equality 3 Macroeconomics 4 Markets and Institutions 5 Brief History 6 Key Issues in Macroeconomics Ryan W. Herzog (GU) Chapter 1: Introduction Spring 2014 2 / 24
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Economics and three Pitfalls Key Concepts What is economics? What is the cost benefit principle? What is the meaning of the term opportunity cost? What is scarcity? Ryan W. Herzog (GU) Chapter 1: Introduction Spring 2014 3 / 24
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Economics and three Pitfalls Three Pitfalls of Economics Measuring costs and benefits as proportions rather than absolute dollar amounts Ignoring implicit costs Failure to think on the marginal Ryan W. Herzog (GU) Chapter 1: Introduction Spring 2014 4 / 24
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Economics and three Pitfalls Opportunity Cost - Example Suppose you won a free ticket to see a Bruce Springsteen concert tonight. You can’t resell it. Bob Dylan is also performing on the same night and his concert is the only other activity you are considering for the night. A Bob Dylan concert costs $40 and on any given day you would be willing to pay as much as $50 to see him perform. There is no other cost of seeing either performer. What is your opportunity cost of attending the Springsteen concert? a $50 b $40 c $10 d $0 Ryan W. Herzog (GU) Chapter 1: Introduction Spring 2014 5 / 24
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Economics and three Pitfalls Opportunity Cost - Example Suppose you won a free ticket to see a Bruce Springsteen concert tonight. You can’t resell it. Bob Dylan is also performing on the same
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