AP Macroeconomics

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28 Οκτ 2013 (πριν από 3 χρόνια και 7 μήνες)

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AP
Macroeconomics

Chapter 1 intro

ECONOMICS


DEF: efficient use of scarce resources


TO

achieve maximum satisfaction of
economic wants



KEY IDEA

”no such thing as a free lunch”


OPPORTUNITY COST

UTILITY


Satisfaction/happiness


Weigh costs vs. benefits


“marginal cost” vs. “marginal benefit”


If mb is more than MC
---
buy product



Too much of a good thing??


ECONOMIC METHOD


FACTS
---
DATA


FORMULATE HYPOTHESIS


TEST IT


ACCEPT OR REJECT IT


CREATE A THEORY/LAW/PRINCIPLE



USE GENERALIZATIONS

WHAT WILL A
TYPICAL CONSUMER DO???

CETERIS PARIBUS


“ALL OTHER THINGS BEING EQUAL”


CONTROL GROUP


ALL OTHER VARIABLES CONSTANT


“IMPRECISE” SCIENCE

ECONOMIC GOALS


1
-
ECONOMIC GROWTH


2
-
FULL EMPLOYMENT


3
-
PRICE LEVEL STABILITY


4
-
ECONOMIC FREEDOM


5
-
EQUITABLE DISTRIBUTION OF
INCOME


6
-
INCOME SECURITY


7
-
BALANCE OF TRADE

Types of Economics


MACROECON


All consumers


“aggregate”


Use positive econ


facts


Use normative econ


“should be’s”


MICROECON


Specific industries,
products


Small units



PITFALLS TO REASONING


1
-
BIASES


2
-
TERMS


3
-
FALLACY OF COMPOSITION


4
-
POST HOC, ERGO PROPTER HOC


5
-
CORRELATION VS. CAUSATION