- No new reading assignment- HW is posted on the class website- Income:o Median is $40,000o 95th percentile is $100,000o 99th percentile is $300,000- Economics is the study of choice under conditions of scarcity and uncertainty- Micro vs. Macroo Micro: Consumer theory Firm theory Cost & production Gov’t. policy Individual/firmo Macro: Macro aggregates:- GDP - Unemployment- Inflation- Growth- Interest rates- Exchange rates Business cycles (SR-short run) Economic growth (LR-long run) International trade Gov’t. expenditure & taxation Gov’t. deficits Gov’t. debt Federal Reserve Bank- Broad Principleso There are gains from tradeo Markets move toward equilibriumo Resources should be used as efficiently as possible to achieve society’s goals There is a trade-off between efficiency and equityo Markets usually lead to efficiencyo When markets don’t achieve efficiency (see e.g.’s below), gov’t. intervention can improve society’s welfare Monopolies Public goods Externalitieso *One person’s spending is another’s incomeo *Overall spending sometimes gets out of line w/the economy’s capacityo *Gov’t. policies can change spending- Positive vs. Normativeo Positive: Factual: what is Objective “Verifiable” Descriptiveo Normative: Value-oriented Subjective Not verifiable Prescriptive: what should/ought to be done- Disagreements among economistso It’s often about the media coming up w/a good storyo They often disagree over the politics, not the economics of a policyo Modelling disagreement E.g. SR vs. LR
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