MACROECONOMICS. N. Gregory Mankiw. The Science of Macroeconomics 8/2/2011. In this chapter, you will learn: Important issues in macroeconomics

Size: px
Start display at page:

Download "MACROECONOMICS. N. Gregory Mankiw. The Science of Macroeconomics 8/2/2011. In this chapter, you will learn: Important issues in macroeconomics"

Transcription

1 E V E N T H E I T I O N 0 0 U A T E 8//0 MACROECONOMIC N. Gregory Mankiw oweroint lides by Ron Cronovich C H A T E R In this chapter, you will learn: about the issues macroeconomists study the tools macroeconomists use some important concepts in macroeconomic analysis 0 Worth ublishers, all rights reserved Important issues in macroeconomics Macroeconomics, the study of the economy as a whole, addresses many topical issues, e.g.: What causes recessions? What is government stimulus and why might it help? How can problems in the housing market spread to the rest of the economy? What is the government budget deficit? How does it affect workers, consumers, businesses, and taxpayers? Important issues in macroeconomics Macroeconomics, the study of the economy as a whole, addresses many topical issues, e.g.: Why does the cost of living keep rising? Why are so many countries poor? What policies might help them grow out of poverty? What is the trade deficit? How does it affect the country s well-being? U.. Real G per capita (000 dollars) U.. Inflation Rate (% per year) 9//00 First oil long-run upward price trend shock Great epression econd oil price shock World War II

2 change from mos earlier percent change from mos earlier percent of labor force 8//0 U.. Unemployment Rate (% of labor force). The macroeconomy affects society s well-being. U.. Unemployment and roperty Crime Rates ocial problems like homelessness, domestic violence, crime, roperty and crimes poverty are linked to the (right economy. scale) For example Unemployment (left scale) crimes per 00,000 population. The macroeconomy affects your well-being unemployment rate In most years, wage growth falls when unemployment is rising. inflation-adjusted mean wage (right scale) The macroeconomy affects election outcomes. Unemployment & inflation in election years year U rate inflation rate elec. outcome %.8% Carter () %.% Reagan (R) % 4.% Reagan (R) 988.% 4.% Bush I (R) 99 7.%.0% Clinton () 996.4%.% Clinton () %.4% Bush II (R) 004.%.% Bush II (R) %.8% Obama () Economic models are simplified versions of a more complex reality irrelevant details are stripped away are used to show relationships between variables explain the economy s behavior devise policies to improve economic performance 0 Example of a model: upply & demand for new cars shows how various events affect price and quantity assumes the market is competitive: each buyer and seller is too small to affect the market price Variables d = quantity that buyers demand s = quantity that producers supply = price of new cars Y = aggregate income s = price of steel (an input)

3 8//0 The demand for cars demand equation: d = (,Y ) shows that the quantity consumers demand is related to the price and aggregate income igression: functional notation General functional notation shows only that the variables are related. d = (,Y ) A specific functional form shows the precise A list of quantitative the relationship. Example: variables (,Y that affect ) = 60 d 0 + Y The market for cars: emand The market for cars: upply demand equation: d = (,Y ) rice supply equation: s = (, ) rice The demand curve shows the relationship between quantity demanded and price, other things equal. uantity The supply curve shows the relationship between quantity supplied and price, other things equal. uantity 4 The market for cars: Equilibrium The effects of an increase in income rice demand equation: d = (,Y ) rice equilibrium price equilibrium quantity uantity An increase in income increases the quantity consumers demand at each price which increases the equilibrium price and quantity. uantity 6 7

4 8//0 The effects of a steel price increase supply equation: s = (, ) An increase in s reduces the quantity of cars producers supply at each price which increases the market price and reduces the quantity. rice uantity Endogenous vs. exogenous variables The values of endogenous variables are determined in the model. The values of exogenous variables are determined outside the model: the model takes their values & behavior as given. In the model of supply & demand for cars, endogenous: exogenous:, d, s Y, s 8 9 NOW YOU TRY: upply and emand. Write down demand and supply equations for wireless phones; include two exogenous variables in each equation.. raw a supply-demand graph for wireless phones.. Use your graph to show how a change in one of your exogenous variables affects the model s endogenous variables. The use of multiple models No one model can address all the issues we care about. E.g., our supply-demand model of the car market can tell us how a fall in aggregate income affects price & quantity. cannot tell us why aggregate income falls. The use of multiple models o we will learn different models for studying different issues (e.g., unemployment, inflation, long-run growth). For each new model, you should keep track of its assumptions which variables are endogenous, which are exogenous the questions it can help us understand, those it cannot rices: flexible vs. sticky Market clearing: An assumption that prices are flexible, adjust to equate supply and demand. In the short run, many prices are sticky adjust sluggishly in response to changes in supply or demand. For example: many labor contracts fix the nominal wage for a year or longer many magazine publishers change prices only once every -4 years 4

5 8//0 rices: flexible vs. sticky Outline of this book: The economy s behavior depends partly on whether prices are sticky or flexible: If prices sticky (short run), demand may not equal supply, which explains: Introductory material (Chaps. & ) Classical Theory (Chaps. -6) How the economy works in the long run, when prices are flexible unemployment (excess supply of labor) why firms cannot always sell all the goods they produce If prices flexible (long run), markets clear and economy behaves very differently Growth Theory (Chaps. 7-8) The standard of living and its growth rate over the very long run Business Cycle Theory (Chaps. 9-4) How the economy works in the short run, when prices are sticky 4 Outline of this book: Chapter ummary olicy debates (Chaps. -6) hould the government try to smooth business cycle fluctuations? Is the government s debt a problem? Microeconomic foundations (Chaps. 7-9) Insights from looking at the behavior of consumers, firms, and other issues from a microeconomic perspective Macroeconomics is the study of the economy as a whole, including growth in incomes changes in the overall level of prices the unemployment rate Macroeconomists attempt to explain the economy and to devise policies to improve its performance. 6 Chapter ummary Economists use different models to examine different issues. Models with flexible prices describe the economy in the long run; models with sticky prices describe the economy in the short run. Macroeconomic events and performance arise from many microeconomic transactions, so macroeconomics uses many of the tools of microeconomics.

Chapter 1 The Science of Macroeconomics

Chapter 1 The Science of Macroeconomics Chapter 1 The Science of Macroeconomics Modified by Yun Wang Eco 3203 Intermediate Macroeconomics Florida International University Summer 2017 2016 Worth Publishers, all rights reserved Learning Objectives

More information

EC202: Macroeconomics. Other issues. Key question in macroeconomics. Call me Matteo if you want / feel. Feel free the me at any time

EC202: Macroeconomics. Other issues. Key question in macroeconomics. Call me Matteo if you want / feel. Feel free the  me at any time EC202: Macroeconomics Teacher: rofessor Matteo Iacoviello iacoviel@bc.eu http://www2.bc.eu/~iacoviel/teach/0708/ec202.html Office hours: Tuesay, 3.30 4.30 M Book: Mankiw G., Macroeconomics, 6 th eition

More information

Macroeonomics. 4 this chapter, The Market Forces of Supply and Demand. look for the answers to these questions: Demand. Markets and Competition

Macroeonomics. 4 this chapter, The Market Forces of Supply and Demand. look for the answers to these questions: Demand. Markets and Competition C H A T E R In 4 this chapter, look for the answers to these questions: The Market Forces of upply and emand R I N C I L E O F Macroeonomics N. Gregory Mankiw remium oweroint lides by Ron Cronovich 2009

More information

Lesson 5. Adam Smith and the Free Market 1/27/2013. Markets and Competition. Unit 2. Krugman, Module 67 pp

Lesson 5. Adam Smith and the Free Market 1/27/2013. Markets and Competition. Unit 2. Krugman, Module 67 pp Unit 2 Adam mith and the Free Market Lesson 5 Krugman, Module 67 pp. 71-76 0 Markets and Competition A market is a group of buyers and sellers of a particular product. A competitive market is one with

More information

LESSON 9. Economic Fluctuations: Balancing Aggregate Demand and Supply

LESSON 9. Economic Fluctuations: Balancing Aggregate Demand and Supply LESSON 9 Economic Fluctuations: Balancing Aggregate Demand and Supply Assigned Reading 1. Mankiw, N. Gregory, et al. 2011. Principles of Macroeconomics (5 th Canadian Edition). Toronto: Thomson Nelson.

More information

PowerPoint Lecture Notes for Chapter 4. Principles of Microeconomics 6 th edition, by N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich

PowerPoint Lecture Notes for Chapter 4. Principles of Microeconomics 6 th edition, by N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich oweroint Lecture Notes for Chapter 4 The Market Forces of Supply and Demand rinciples of Microeconomics 6 th edition, by N. Gregory Mankiw remium oweroint Slides by Ron Cronovich N. Gregory Mankiw Microeconomics

More information

Thinking Like an Economist. Thinking Like an Economist THE ECONOMIST AS A SCIENTIST. Chapter 2. Thinking Like an Economist

Thinking Like an Economist. Thinking Like an Economist THE ECONOMIST AS A SCIENTIST. Chapter 2. Thinking Like an Economist Chapter 2 Thinking Like an Economist Thinking Like an Economist Every field of study has its own terminology Mathematics integrals axioms vector spaces Psychology ego id cognitive dissonance Law promissory

More information

Macroeconomics Sixth Edition

Macroeconomics Sixth Edition N. Gregory Mankiw Principles of Macroeconomics Sixth Edition 2 Thinking Like an Economist Premium PowerPoint Slides by Ron Cronovich In this chapter, look for the answers to these questions: What are economists

More information

Agenda. The IS-LM/AD-AS Model: A General Framework for Macroeconomic Analysis, Part 3. Disequilibrium in the AD-AS model

Agenda. The IS-LM/AD-AS Model: A General Framework for Macroeconomic Analysis, Part 3. Disequilibrium in the AD-AS model Agenda The IS-LM/AD-AS Model: A General Framework for Macroeconomic Analysis, art 3 rice Adjustment and the Attainment of General Equilibrium 23-1 23-2 General equilibrium in the AD-AS model Disequilibrium

More information

Chapter 33: Aggregate Demand and Aggregate Supply Principles of Economics, 8 th Edition N. Gregory Mankiw Page 1

Chapter 33: Aggregate Demand and Aggregate Supply Principles of Economics, 8 th Edition N. Gregory Mankiw Page 1 Page 1 1. Introduction a. We now turn to a short term view of fluctuations in the economy. b. This is the chapter that made this book controversial as Mankiw tends to ignore the Keynesian framework contained

More information

PRINCIPLES OF ECONOMICS IN CONTEXT CONTENTS

PRINCIPLES OF ECONOMICS IN CONTEXT CONTENTS PRINCIPLES OF ECONOMICS IN CONTEXT By Neva Goodwin, Jonathan M. Harris, Julie A. Nelson, Brian Roach, and Mariano Torras CONTENTS PART ONE The Context for Economic Analysis Chapter 0: Economics and Well-Being

More information

Economics. Thinking Like An Economist. The Economist as Scientist. In this chapter, look for the answers to these questions: N.

Economics. Thinking Like An Economist. The Economist as Scientist. In this chapter, look for the answers to these questions: N. C H A P T E R 2 Thinking Like An Economist P R I N C I P L E S O F Economics N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 29 South-Western, a part of Cengage Learning, all rights reserved

More information

Thinking Like an Economist

Thinking Like an Economist The Economist as a Scientist Thinking Like an Economist Chapter 2 The economic way of thinking... Involves thinking analytically and objectively. Makes use of the scientific method. Copyright 2001 by Harcourt,

More information

Markets and Competition. The Market Forces of Supply and Demand. In this chapter, look for the answers to these questions:

Markets and Competition. The Market Forces of Supply and Demand. In this chapter, look for the answers to these questions: 4 The Market Forces of Supply and Demand R I N C I L E S O F ECONOMICS FOURTH EDITION N. GREGORY MANKIW oweroint Slides by Ron Cronovich 200 Thomson South-Western, all rights reserved In this chapter,

More information

Wallingford Public Schools - HIGH SCHOOL COURSE OUTLINE

Wallingford Public Schools - HIGH SCHOOL COURSE OUTLINE Wallingford Public Schools - HIGH SCHOOL COURSE OUTLINE Course Title: Advanced Placement Economics Course Number: 3552 Department: Social Studies Grade(s): 11-12 Level(s): Advanced Placement Credit: 1

More information

Econ 102 Short Run Fluctuation: AS/AD

Econ 102 Short Run Fluctuation: AS/AD Econ 102 Short Run Fluctuation: AS/AD 1. Be sure to read your copy of the Wall Street Journal every weekday, looking especially for items related to the material in this course. Find an article in this

More information

Copyright 2017 by the UBC Real Estate Division

Copyright 2017 by the UBC Real Estate Division DISCLAIMER: This publication is intended for EDUCATIONAL purposes only. The information contained herein is subject to change with no notice, and while a great deal of care has been taken to provide accurate

More information

Microeonomics. Firms in Competitive Markets. In this chapter, look for the answers to these questions: Introduction: A Scenario. N.

Microeonomics. Firms in Competitive Markets. In this chapter, look for the answers to these questions: Introduction: A Scenario. N. C H A T E R 14 Firms in Competitive Markets R I N C I L E S O F Microeonomics N. Gregory Mankiw remium oweroint Slides by Ron Cronovich 2009 South-Western, a part of Cengage Learning, all rights reserved

More information

Microeconomics. Microeconomics. Lectures Jan 05&09; 2017

Microeconomics. Microeconomics. Lectures Jan 05&09; 2017 Microeconomics Lectures 01-02 Jan 05&09; 2017 On this course See the Course Description Why Microeconomics? We will discuss the following topics: The Themes of Microeconomics What Is a Market? Real versus

More information

Notes On IS-LM Model: Application Econ3120, Economic Department, St.Louis University

Notes On IS-LM Model: Application Econ3120, Economic Department, St.Louis University Notes On IS-LM Model: Application Econ3120, Economic Department, St.Louis University Instructor: Xi Wang Introduction In this class note, we assembled the pieces of the IS-LM model as a step toward understanding

More information

Exploring the World of Business and Economics

Exploring the World of Business and Economics Chapter 1 Exploring the World of Business and Economics 1 Discuss what you must do to be successful in the world of business. 2 Define business and identify potential risks and rewards. 3 Define economics

More information

Economics N. Gregory Mankiw. The Markets for the Factors of Production. In this chapter, look for the answers to these questions CHAPTER

Economics N. Gregory Mankiw. The Markets for the Factors of Production. In this chapter, look for the answers to these questions CHAPTER Seventh Edition Principles of Economics N. Gregory Mankiw CHAPTER 18 The Markets for the Factors of Production In this chapter, look for the answers to these questions hat determines a competitive firm

More information

1 http://www.investopedia.com/ask/answers/110.asp Microeconomics looks closely at the behavior of individual participants in the economy. While it does aggregate the observations it makes and draws general

More information

Specific Learning Goals/Benchmarks and Student Assessment. AP Macroeconomics

Specific Learning Goals/Benchmarks and Student Assessment. AP Macroeconomics Unit Bartram Trail HS Specific Learning Goals/Benchmarks and Student Assessment AP Macroeconomics # Benchmark Assessment 1 1 1 2 1 3 1 4 2 5 2 6 3 7 3 8 3 9 3 10 3 11 4 12 4 13 4 14 4 15 4 16 4 17 Define

More information

Lecture 10: THE AD-AS MODEL Reference: Chapter 8

Lecture 10: THE AD-AS MODEL Reference: Chapter 8 Lecture 10: THE AD-AS MODEL Reference: Chapter 8 LEARNING OBJECTIVES 1.What determines the shape of the aggregate demand (AD) curve and what factors shift the entire curve. 2.What determines the shape

More information

Economics 101. Chris Gan July Economics 101 1

Economics 101. Chris Gan July Economics 101 1 Economics 101 Chris Gan July 2010 Economics 101 1 What is Economics A study of charts, tables, statistics and numbers? Study of rational human behavior in pursuit to fulfill needs and wants Problem we

More information

Cosumnes River College Principles of Microeconomics Problem Set 4 Due March 3, 2015

Cosumnes River College Principles of Microeconomics Problem Set 4 Due March 3, 2015 pring 2015 Cosumnes River College rinciples of Microeconomics roblem et 4 ue March 3, 2015 Name: olutions rof. owell Instructions: Write the answers clearly and concisely on these sheets in the spaces

More information

Liang Wang University of Hawaii Manoa. Randall Wright University of Wisconsin Madison Federal Reserve Bank of Minneapolis

Liang Wang University of Hawaii Manoa. Randall Wright University of Wisconsin Madison Federal Reserve Bank of Minneapolis ECONOMIC POLICY PAPER 16-02 JANUARY 2016 EXECUTIVE SUMMARY Many economists believe that prices are sticky they adjust slowly. This stickiness, they suggest, means that changes in the money supply have

More information

Short run aggregate supply

Short run aggregate supply Short run aggregate supply Syllabus snapshot Today we are going to. 1. Understand what is meant by the term short run aggregate supply. 2. Understand why the SRAS curve is upward sloping. 3. Understand

More information

In this chapter, look for the answers to these questions

In this chapter, look for the answers to these questions In this chapter, look for the answers to these questions What are economists two roles? How do they differ? What are models? How do economists use them? What are the elements of the Circular-Flow Diagram?

More information

PRINCIPLES OF MACROECONOMICS. Chapter 1 Welcome to Economics!

PRINCIPLES OF MACROECONOMICS. Chapter 1 Welcome to Economics! PRINCIPLES OF MACROECONOMICS Chapter 1 Welcome to Economics! 2 Chapter Outline 1.1 Three Key Economic Ideas 1.2 The Economic Problem That Every Society Must Solve 1.3 Economic Models 1.4 Microeconomics

More information

Consumers, Producers, and the Efficiency of Markets. Premium PowerPoint Slides by Vance Ginn & Ron Cronovich

Consumers, Producers, and the Efficiency of Markets. Premium PowerPoint Slides by Vance Ginn & Ron Cronovich C H A T E R Consumers, roducers, and the Efficiency of Markets Economics R I N C I L E S O F N. Gregory Mankiw remium oweroint Slides by Vance Ginn & Ron Cronovich 2009 South-Western, a part of Cengage

More information

THINKING LIKE AN ECONOMIST

THINKING LIKE AN ECONOMIST Set? how economists apply the methods of science THINKING LIKE AN ECONOMIST CONTEXT AND PURPOSE Chapter 2 is the second chapter in a three-chapter section that serves as the introduction of the text. Chapter

More information

P R I N C I P L E S O F

P R I N C I P L E S O F 2 Thinking Like n Economist P R I N C I P L E S O F MICROECONOMICS FOURTH EDITION N. GREGORY MNKIW Premium PowerPoint Slides by Ron Cronovich 27 update 28 Thomson South-Western, all rights reserved In

More information

Understanding the AD-AS Model: Aggregate Demand-Aggregate Supply

Understanding the AD-AS Model: Aggregate Demand-Aggregate Supply Understanding the AD-AS Model: Aggregate Demand-Aggregate Supply (actually it s AD-SRAS-LRAS) It is the foundation of realsector models of macroeconomics, including the Classical Theory and Keynesian Theory.

More information

CHAPTER 3. Economic Challenges Facing Contemporary Business

CHAPTER 3. Economic Challenges Facing Contemporary Business CHAPTER 3 Economic Challenges Facing Contemporary Business Chapter Summary: Key Concepts Opening Overview Economics Microeconomics Macroeconomics A social science that analyzes the choices people and governments

More information

Introduction. Learning Objectives. Chapter 11. Classical and Keynesian Macro Analyses

Introduction. Learning Objectives. Chapter 11. Classical and Keynesian Macro Analyses Copyright 2012 Pearson Addison-Wesley. All rights reserved. Chapter 11 Classical and Keynesian Macro Analyses Introduction During the latter half of the 2000s, annual rates of U.S. real GDP growth varied

More information

It would be helpful to ask your students to bring calculators to class on the day you cover this chapter (as well as chapter 3).

It would be helpful to ask your students to bring calculators to class on the day you cover this chapter (as well as chapter 3). PowerPoint Lecture Notes for Chapter 2: Thinking Like An Economist Essentials of Economics 4 th edition, by N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 2 Thinking Like An Economist E S

More information

AP Macroeconomics. You can use whichever format you want. Web view is recommended -- the responsive design works seamlessly on any device.

AP Macroeconomics. You can use whichever format you want. Web view is recommended -- the responsive design works seamlessly on any device. AP Macroeconomics Instructor Mrs. Crisler Room 428 Office Hours 2:42-3:15 M,T,W,TH 2:00-3:15 F E-mail jcrisler@satsumaschools.com Phone 380-8190 Twitter Joy Crisler @ shsgovteach Economics : Macroeconomics

More information

The principles of HOW PEOPLE MAKE DECISIONS

The principles of HOW PEOPLE MAKE DECISIONS 1 Ten Principles of Economics P R I N C I P L E S O F MICROECONOMICS FOURTH EDITION N. GREGORY MANKIW Premium PowerPoint Slides by Ron Cronovich 2007 update 2008 Thomson South-Western, all rights reserved

More information

Unit One, Day One (pages 6-20, 28) ECONOMICS: The study of how limited productive resources are efficiently allocated in a world of unlimited wants.

Unit One, Day One (pages 6-20, 28) ECONOMICS: The study of how limited productive resources are efficiently allocated in a world of unlimited wants. Unit One, Day One (pages 6-20, 28) ECONOMICS: The study of how limited productive resources are efficiently allocated in a world of unlimited wants. SCARCITY: WANTS EXCEED RESOURCES We want more than we

More information

Chapter 1. Introduction

Chapter 1. Introduction Chapter 1 You must have already been introduced to a study of basic microeconomics. This chapter begins by giving you a simplified account of how macroeconomics differs from the microeconomics that you

More information

Thinking Like an Economist

Thinking Like an Economist Seventh Edition Principles of Economics N. Gregory Mankiw Wojciech Gerson (1831-1901) CHAPTER 2 Thinking Like an Economist In this chapter, look for the answers to these questions What are economists two

More information

PowerPoint Lecture Notes for Chapter 2: Thinking Like An Economist Principles of Economics

PowerPoint Lecture Notes for Chapter 2: Thinking Like An Economist Principles of Economics PowerPoint Lecture Notes for Chapter 2: Thinking Like An Economist Principles of Economics 5 th edition, by N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich C H A P T E R 2 Thinking Like An

More information

FAQ: Decision-Making Strategies

FAQ: Decision-Making Strategies Q&A: Decision-Making Strategies Question 1: What is supply and demand? Answer 1: Supply refers to the actions of firms to create, distribute, and market goods and services. Firms create products that they

More information

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity CHAPTER 4 Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity CHAPTER OVERVIEW Price elasticity is one of the most useful concepts in economics. It measures the responsiveness

More information

Economics N. Gregory Mankiw. The Market Forces of Supply and Demand. Markets and Competition. In this chapter, look for the answers to these questions

Economics N. Gregory Mankiw. The Market Forces of Supply and Demand. Markets and Competition. In this chapter, look for the answers to these questions Seventh Edition rinciples of Economics N. Gregory Mankiw CHATER 4 The Market Forces of Supply and Demand In this chapter, look for the answers to these questions What factors affect buyers demand for goods?

More information

Thinking Like an Economist

Thinking Like an Economist CHAPTER 2 Thinking Like an Economist Goals in this chapter you will Consider how assumptions and models can shed light on the world Learn two simple models the circular-flow diagram and the production

More information

Economics in Context

Economics in Context P rinciples of Economics in Context Visit the Principles of Economics in Context web site www.gdae.org/principles for Student Study Guide and other instructor and student support materials. This page intentionally

More information

AP Economics Final Exam Krugman2014v1

AP Economics Final Exam Krugman2014v1 AP Economics Final Exam Krugman2014v1 Multiple Choice Identify the choice that best completes the statement or answers the question. Module 1 1. Scarcity in economics means: 2 2. Suppose people in households

More information

Chapter 1: Ten Principles of Economics Principles of Economics, 8 th Edition N. Gregory Mankiw Page 1

Chapter 1: Ten Principles of Economics Principles of Economics, 8 th Edition N. Gregory Mankiw Page 1 Page 1 I. Introduction A. Use the margins in your book for note keeping. B. My comments in these chapter summaries are in italics. C. For testing purposes, you are responsible for material covered in the

More information

SUPPLY AND DEMAND. Market simulation. The demand curve Price

SUPPLY AND DEMAND. Market simulation. The demand curve Price Market simulation UPPLY AN EMAN Your mission: maximize portfolio value = (# shares x your valuation per share) + cash. ifferent people have different valuations for shares; hence there are gains from trade.

More information

ECON 1010 Principles of Macroeconomics. Midterm Exam #1. Professor: David Aadland. Spring Semester February 14, 2017.

ECON 1010 Principles of Macroeconomics. Midterm Exam #1. Professor: David Aadland. Spring Semester February 14, 2017. ECON 1010 Principles of Macroeconomics Midterm Exam #1 Professor: David Aadland Spring Semester 2017 February 14, 2017 Your Name Section 1: Multiple Choice and T/F (60 pts). Circle the correct answer;

More information

Chapter 2 The Economic Problem: Scarcity, and Choice Principles of Macroeconomics, Case/Fair, 8e

Chapter 2 The Economic Problem: Scarcity, and Choice Principles of Macroeconomics, Case/Fair, 8e Chapter 2 The Economic Problem: Scarcity, and Choice Principles of Macroeconomics, Case/Fair, 8e 2.1 Scarcity, Choice, and Opportunity Cost Multiple Choice 1) The process by which resources are transformed

More information

Economics. Monopoly. Introduction. In this chapter, look for the answers to these questions: N. Gregory Mankiw

Economics. Monopoly. Introduction. In this chapter, look for the answers to these questions: N. Gregory Mankiw C H A P T E R 15 Monopoly P R I N C I P L E S O F Economics N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 2009 South-Western, a part of Cengage Learning, all rights reserved In this chapter,

More information

Macroeconomics Sixth Edition

Macroeconomics Sixth Edition N. Gregory Mankiw Principles of Macroeconomics Sixth Edition 3 Interdependence and the Gains from Trade Premium PowerPoint Slides by Ron Cronovich In this chapter, look for the answers to these questions:

More information

Chapter 1: Ten Principles of Economics Principles of Economics, 4 th Edition N. Gregory Mankiw Page 1

Chapter 1: Ten Principles of Economics Principles of Economics, 4 th Edition N. Gregory Mankiw Page 1 Page 1 1. Introduction a. My comments in these chapter summaries are in italics. b. For testing purposes, you are responsible for material covered in the text, but not for my comments. c. The margins in

More information

Principles of Macroeconomics, 11e - TB1 (Case/Fair/Oster) Chapter 2 The Economic Problem: Scarcity and Choice

Principles of Macroeconomics, 11e - TB1 (Case/Fair/Oster) Chapter 2 The Economic Problem: Scarcity and Choice Principles of Macroeconomics, 11e - TB1 (Case/Fair/Oster) Chapter 2 The Economic Problem: Scarcity and Choice 2.1 Scarcity, Choice, and Opportunity Cost 1) The process by which resources are transformed

More information

Ten Principles of Economics

Ten Principles of Economics C H A P T E R 1 Ten Principles of Economics Economics P R I N C I P L E S O F N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 2009 South-Western, a part of Cengage Learning, all rights reserved

More information

Part II: Economic Growth. Part I: LRAS

Part II: Economic Growth. Part I: LRAS LRAS & LONG-RUN EQUILIBRIUM - 1 - Part I: LRAS 1) The quantity of real GDP supplied at full employment is called A) hypothetical GDP. B) short-run equilibrium GDP. C) potential GDP. D) all of the above.

More information

CHAPTER 1. PRELIMINARIES

CHAPTER 1. PRELIMINARIES CHAPTER 1. PRELIMINARIES Read Pindyck and Rubinfeld (2013), Chapter 1 Microeconomics, 8 h Edition by R.S. Pindyck and D.L. Rubinfeld Adapted by Chairat Aemkulwat for Econ I: 2900111 1/7/2015 CHAPTER 1

More information

Framingham State College. Principles Of Microeconomics. Problem Set Number 1. Ten Principles of Economics Quiz

Framingham State College. Principles Of Microeconomics. Problem Set Number 1. Ten Principles of Economics Quiz Framingham State College Principles Of Microeconomics Problem Set Number 1 Ten Principles of Economics Quiz You My Name is? Introduction Q1. We live in a world of? A1. Scarcity Q2. What did Alfred Marshall

More information

Macroeconomics, Financial Intermediaries and Money Markets. By Scott Alan Carson

Macroeconomics, Financial Intermediaries and Money Markets. By Scott Alan Carson 1 Macroeconomics, Financial Intermediaries and Money Markets By Scott Alan Carson Our interest now turns to the total economy, to the aggregates. Recall the market model that was introduced to you in your

More information

Thinking Like an Economist

Thinking Like an Economist Thinking Like an Economist Context Chapter and Purpose Chapter 2 is the second chapter in a three-chapter section that serves as the introduction of the text. Chapter 1 introduced ten principles of economics

More information

! " # $ % % & $'( # ) * 1

!  # $ % % & $'( # ) * 1 ! " # $% %&$'( # ) * 1 +,+ #+ ' Percent of annual dollar usage A Items 80 70 60 50 40 30 0 10 0 B Items &( &( + C Items 10 0 30 40 50 60 70 Percent of inventory items Figure 1. ' - %. &( + / / 0 + 1 /

More information

GACE Economics Assessment Test at a Glance

GACE Economics Assessment Test at a Glance GACE Economics Assessment Test at a Glance Updated June 2017 See the GACE Economics Assessment Study Companion for practice questions and preparation resources. Assessment Name Economics Grade Level 6

More information

Social Studies Curriculum Guide GRADE 12 ECONOMICS

Social Studies Curriculum Guide GRADE 12 ECONOMICS Social Studies Curriculum Guide GRADE 12 ECONOMICS It is the policy of the Fulton County School System not to discriminate on the basis of race, color, sex, religion, national origin, age, or disability

More information

Lecture 1: Introduction

Lecture 1: Introduction Lecture 1: Introduction Yulei Luo SEF of HKU January 19, 2013 Luo, Y. (SEF of HKU) ECON1002C/D January 19, 2013 1 / 16 Economics, Microeconomics and Macroeconomics Economics: The study of the choices people

More information

Chapter 2: Thinking like an economist. Ch. 2: Thinking like an economist

Chapter 2: Thinking like an economist. Ch. 2: Thinking like an economist Chapter 2: Thinking like an economist Ch. 2: Thinking like an economist Microeconomics versus Macroeconomics Microeconomics: the study of how households and firms make decisions and how they interact in

More information

Economic concepts. Economics 2A, 2B, 2C, 2D. Principles and 3A, 3B. Practices 4A, 4B. By 5A, 5B. 3. Opportunity costs

Economic concepts. Economics 2A, 2B, 2C, 2D. Principles and 3A, 3B. Practices 4A, 4B. By 5A, 5B. 3. Opportunity costs First Six Weeks The student will be able to identify and explain basic economic concepts. Students should be able to understand terms related to individual consumers and businesses. Be able to explain

More information

2.2 Aggregate Demand and Aggregate Supply

2.2 Aggregate Demand and Aggregate Supply 2.2 Aggregate Demand and Aggregate Supply Aggregate Demand (AD): the total spending on all goods and services in an economy at a given price level over a period of time. The macroeconomic concept of aggregate

More information

Jayashree Sil Submit Questionnaire Supply and Demand First Week: Text: Lecture 1 Slides Lecture 2 Slides & Problem Set 1:

Jayashree Sil Submit Questionnaire Supply and Demand First Week: Text: Lecture 1 Slides Lecture 2 Slides & Problem Set 1: epartment of Economics Economics, ummer Lecture, June, ubmit Questionnaire:To Front of Class (or to end of aisle if seated) First Week: Must be present for roll call each day. If you are trying to switch

More information

Copyright 2011 Nelson Education Limited 1

Copyright 2011 Nelson Education Limited 1 Lecture PowerPoint Slides to accompany Prepared by Marc Prud Homme, University of Ottawa 1 Chapter 2 Thinking like an Economist 2 In this chapter, look for the answers to these questions: What are economists

More information

UNIT 1: WHAT IS ECONOMICS?

UNIT 1: WHAT IS ECONOMICS? Advanced Placement AP Macroeconomics AP* Macroeconomics students learn why and how the world economy can change from month to month, how to identify trends in our economy, and how to use those trends to

More information

Micro Lecture 9: Consumer and Producer Surplus Applications

Micro Lecture 9: Consumer and Producer Surplus Applications Micro Lecture 9: onsumer and roducer urplus Applications Review onsumer urplus: The net benefit buyers enjoy from purchasing and consuming the good. Height of Market emand urve: Reflects the benefit a

More information

EC 201 Lecture Notes 1 Page 1 of 1

EC 201 Lecture Notes 1 Page 1 of 1 EC 201 Lecture Notes 1 Page 1 of 1 ECON 201 - Macroeconomics Lecture Notes 1 Metropolitan State University Allen Bellas The textbooks for this course are Macroeconomics: Principles and Policy by William

More information

USING OIL PRICE SHOCKS TO TEACH THE AS-AD MODEL IN A BLENDED LEARNING STRATEGY *

USING OIL PRICE SHOCKS TO TEACH THE AS-AD MODEL IN A BLENDED LEARNING STRATEGY * Australasian Journal of Economics Education Volume 8, Number 2, 2011, pp.63-87 USING OIL PRICE SHOCKS TO TEACH THE AS-AD MODEL IN A BLENDED LEARNING STRATEGY * Harry Tse Business School Economics Group,

More information

Economics Challenge Online State Qualification Practice Test. 1. An increase in aggregate demand would tend to result from

Economics Challenge Online State Qualification Practice Test. 1. An increase in aggregate demand would tend to result from 1. An increase in aggregate demand would tend to result from A. an increase in tax rates. B. a decrease in consumer spending. C. a decrease in net export spending. D. an increase in business investment.

More information

CHAPTER 29: AGGREGATE DEMAND AND AGGREGATE SUPPLY

CHAPTER 29: AGGREGATE DEMAND AND AGGREGATE SUPPLY ~~~~~~~~... CHAPTER 29: AGGREGATE DEMAND AND AGGREGATE SUPPLY Introduction The aggregate demand-aggregate supply (AD-AS) model provides the primary graphic d~piction of changes in the macroeconomy. Shifts

More information

Ten Principles of Economics

Ten Principles of Economics C H A P T E R 1 Ten Principles of Economics Economics P R I N C I P L E S O F N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 2009 South-Western, a part of Cengage Learning, all rights reserved

More information

The Monetary Policy and Aggregate Demand Curves

The Monetary Policy and Aggregate Demand Curves The Monetary Policy and Aggregate Demand Curves This lecture explains the positive relationship between the real interest rate and inflation, which is illustrated by the monetary policy (MP) curve. The

More information

Chapter 1. The Art and Science of Economic Analysis. These slides supplement the textbook, but should not replace reading the textbook

Chapter 1. The Art and Science of Economic Analysis. These slides supplement the textbook, but should not replace reading the textbook Chapter 1 The Art and Science of Economic Analysis These slides supplement the textbook, but should not replace reading the textbook What is the economic problem? Because we live in a world of scarce resources,

More information

Got stuff? I. The Economic Problem. Chapter 1: The Economic Way of Thinking

Got stuff? I. The Economic Problem. Chapter 1: The Economic Way of Thinking Chapter 1: The Economic Way of Thinking The Economic Problem Production Possibilities Economic Analysis Got stuff? Who made it? How was it made? How did you get it? I. The Economic Problem the basic economic

More information

GACE. Study Companion Economics Assessment. For the most up-to-date information, visit the ETS GACE website at gace.ets.org.

GACE. Study Companion Economics Assessment. For the most up-to-date information, visit the ETS GACE website at gace.ets.org. GACE Study Companion Economics Assessment For the most up-to-date information, visit the ETS GACE website at gace.ets.org. Last Updated: January 2016 Copyright 2016 by Educational Testing Service. All

More information

PLEASE PLACE YOUR ANSWER ON THE FRONT OF THE ATTACHED SCANNER SHEET

PLEASE PLACE YOUR ANSWER ON THE FRONT OF THE ATTACHED SCANNER SHEET PART 1: MULTIPLE CHOICE -- 90 POINTS Choose the single best answer for the following 30 questions. PLEASE PLACE YOUR ANSWER ON THE FRONT OF THE ATTACHED SCANNER SHEET STARTING WITH NUMBER 1. Circle your

More information

FIRST INTRODUCTION TO. Dr. Mohammed A. Alwosabi. ECON140: Microeconomics Ch.1 Dr. Mohammed Alwosabi. Chapter 1

FIRST INTRODUCTION TO. Dr. Mohammed A. Alwosabi. ECON140: Microeconomics Ch.1 Dr. Mohammed Alwosabi. Chapter 1 Chapter 1 FIRST INTRODUCTION TO ECONOMICS Dr. Mohammed A. Alwosabi 1 The Fundamental Problem of Economics: Scarcity and Choice It is a fact of life that we cannot get everything we want. We all want more

More information

WEEK 4: Economics: Foundations and Models

WEEK 4: Economics: Foundations and Models WEEK 4: Economics: Foundations and Models Economics: study of the choices people and societies make to attain their unlimited wants, given their scarce resources Market: group of buyers and seels of good

More information

Gross Domestic Product

Gross Domestic Product Question 1: What is GDP? Answer 1: From a macroperspective, the broadest measure of economic activity is gross domestic product (GDP). GDP represents all the goods and services that are produced within

More information

consumption function

consumption function 1 Every day you make choices on what to do with the money you have. Should you splurge on a restaurant meal or save money by eating at home? Should you buy a new car, if so how expensive of a model? Should

More information

Economics: Foundations and Models

Economics: Foundations and Models R. GLENN HUBBARD ANTHONY PATRICK O BRIEN Macroeconomics FOURTH EDITION CHAPTER 1 Economics: Foundations and Models Chapter Outline and Learning Objectives 1.1 Three Key Economic Ideas 1.2 The Economic

More information

Level 4 Level 5 X Level 6 Level 7 Level 8 Mark the box to the right of the appropriate level with an X

Level 4 Level 5 X Level 6 Level 7 Level 8 Mark the box to the right of the appropriate level with an X MODULE SPECIFICATION TEMPLATE MODULE DETAILS Module title Economic Theory and Applications Module code EC224 Credit value 20 Level Level 4 Level 5 X Level 6 Level 7 Level 8 Mark the box to the right of

More information

foundations of economics fourth edition Andrew Gillespie OXFORD UNIVERSITY PRESS

foundations of economics fourth edition Andrew Gillespie OXFORD UNIVERSITY PRESS foundations of economics fourth edition Andrew Gillespie OXFORD UNIVERSITY PRESS Detailed contents Preface How to use this book About the Online Resource Centre Guided tour of Dashboard Acknowledgements

More information

Microfoundations and General Equilibrium. Before beginning our study of specific macroeconomic questions, we review some micro

Microfoundations and General Equilibrium. Before beginning our study of specific macroeconomic questions, we review some micro Microfoundations and General Equilibrium I. Introduction Before beginning our study of specific macroeconomic questions, we review some micro economic theories and the general equilibrium approach to economic

More information

Education & Training Plan. Economics Professional Certificate Program with Externship. Economics Professional Certificate Program with Externship

Education & Training Plan. Economics Professional Certificate Program with Externship. Economics Professional Certificate Program with Externship Clemson University - Center for Corporate Learning 1 North Main Street, 7th Floor, Greenville, SC 29601 http://www.clemson.edu/online/ Contact: Juanita Durham 864.656.3984 jdrhm@clemson.edu Education &

More information

1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price

1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price 1. Demand: willingness to buy a good or service and the ability to pay for it; how much of an item an individual is willing to purchase at each price 2. The two things needed for demand to exist are: willingness

More information

Social Science Department Advanced Placement Macroeconomics Syllabus Course Objective and Overview

Social Science Department Advanced Placement Macroeconomics Syllabus Course Objective and Overview Social Science Department Advanced Placement Macroeconomics Syllabus 2007 2008 Course Objective and Overview This Advanced Placement course is designed to improve and enhance student understanding and

More information

The relationship between the market price of a good and the quantity demanded of that good, other things held constant.

The relationship between the market price of a good and the quantity demanded of that good, other things held constant. 1 DEMAND AND SUPPY DEMAND Demand Curve The relationship between the market price of a good and the quantity demanded of that good, other things held constant. Effective Demand - Quantity of a good or service

More information

Economics. Synopsis. 1. Economic Concepts, Issues and Tools. 2. An Overview of Economics. Sections. Learning Summary. Sections

Economics. Synopsis. 1. Economic Concepts, Issues and Tools. 2. An Overview of Economics. Sections. Learning Summary. Sections Synopsis Economics 1. Economic Concepts, Issues and Tools 1.1 Introduction 1.2 Scarcity and Choice 1.3 Preferences, Resources and Economic Efficiency 1.4 Marginal Analysis and Opportunity Cost 1.5 Different

More information

Problem Set 3. I. Problem 1. Explain each of the following statements using supply-and-demand diagrams.

Problem Set 3. I. Problem 1. Explain each of the following statements using supply-and-demand diagrams. Problem Set 3 I. Problem 1. Explain each of the following statements using supply-and-demand diagrams. a) When the weather turns warm in New England every summer, the price of hotel rooms in Caribbean

More information

College: Department: Course ID: Full Course Description: Course ID: Full Course Description: Course ID: Full Course Description: Course ID:

College: Department: Course ID: Full Course Description: Course ID: Full Course Description: Course ID: Full Course Description: Course ID: ٢٠١٤٩٥ Description: Special Topics This course is designed in a form of a workshop to conduct a thorough study and discussion of some topics on economics. ١٥٠٢٠١٧١٣ Description: Microeconomics a ٢٢٠١٣٣٥

More information