Macro and Micro Economics

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28 Οκτ 2013 (πριν από 3 χρόνια και 8 μήνες)

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Agricultural Economics Class

With

Dr.Niv Nozari



WELCOME TO

Microeconomics: ( the
“trees”)

Studies economic behavior of individual
decision making units such as,



Consumers



Resource Owners



Business Firms (producers)


in a market economy

At times, micro will study economic
behavior at the industry level


Macroeconomics: (the
“forest”)

Studies the aggregate
level of economic
activity,



Economic system’s
value of total


output:

GDP



Level of National
Income



Total Level of
Unemployment



General Price Level of
the Economy:


Inflation


Macroeconomics: (the
“forest”)

we will deal with
some
macroeconomic
topics first, then
concentrate on
microeconomics


Normative Economics:

Normative: subjective, value laden,
emotional


“What ought to be” economics


Rx and/or Policy oriented


Hear a bunch of normative economic
statements during political elections


Positive Economics:

Positive: Objective, without emotion or
value judgment!


“What is, What was, What will be”
economics


Based on probability and statistical
methods


Microeconomics



Normative microeconomics



Positive microeconomics


Macroeconomics



Normative macroeconomics



Positive macroeconomics


Macroeconomics


1.

Fiscal Policy:



Govt. tax and spend policies



2. Monetary Policy



Manipulation of the money supply
by the Federal Reserve system to
affect short
-
term interest rates and
control inflation


Private Property Rights

“Negative Externality”:


When you produce or consume a
commodity or service within your
private property rights that imposes a
cost on a third party not directly
involved in the market transaction
.



Private Property Rights

The cost imposed on the third party is
very difficult (expensive) for the third
party to recover


AKA a “Spillover Cost”


Private Property Rights

Laws are often enacted by legislative
bodies that constrain private property
rights in order to rectify negative
externalities, or at least reduce the
cost to third parties in recovering
damages

Negative Externalities

Some Examples:



-
Seat Belt Crack
Down in Tehran.


-
Iran Law for
Motorcyclists.




Negative Externalities

Possible Solutions:




Pass Laws




Post Bond to assure financial
responsibility


Positive Externalities

When you produce or consume a
commodity or service within your
private property rights that bestows a
benefit on a third party not directly
involved in the market transaction
.


Positive Externalities

The benefit bestowed on the third party
is very difficult (expensive) for the
third party to recover


AKA a “Spillover benefit”


References:


N.c.State university
-
College of Agriculture and Life science

Dr.
herman_sampson