Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Economics 202Principles Of MacroeconomicsProfessor Yamin AhmadLecture 1: Introduction• Syllabus• Definition and Tools in Economics• Introduction to MacroeconomicsProfessor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesSyllabus• Sapling Learning Website: http://saplinglearning.com Course: University of Wisconsin – Whitewater –ECON 202 Macroeconomics – Spring14 - Ahmad• Textbook: Krugman and Wells (2009), Macroeconomics, 2ndEdition, Worth• Course Homepage:  http://facstaff.uww.edu/ahmady/courses/econ202/ Note: This is not in D2L! 2Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesRequirements• Homework Assignments, Experiments• Two in-class midterm exams Multiple choice and short answer questions Cumulative• One Final Exam Cumulative Multiple choice questions3Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesGrades• Best Homework Assignments and Experiments = 15%• Option A:– Midterms 25% Each– Final 35%• Option B:– Best Midterm 35%– Final 50%4Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesGrades on Quizzes/Exams• Note: Each individual quiz or exam is not assigned a letter grade• Grade for course depends on which grading scheme awards you the higher score• “Approximate” letter grades on quizzes/exams:– “A”: >=86% “C+”: 66% - 69%– “A-”: 82%-85% “C”: 62% - 65%– “B+”: 78% - 81% “C-”: 56% - 61%– “B”: 74% - 77% “D”: 50% - 55%– “B-”: 70% - 73% “F”: < 50%5Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesExtra CreditExtra Credit will be available during the semester in two forms:• Participation in online discussions on the discussion board/forum These are used to replace low scoring problem sets Count only towards the “homework” part of the course score Rated based upon level of participation/insight into topic• Participation in the UW-Whitewater Economics Club Limited number of spots available (sign up today) Requires participation and attendance at all Econ Club events 5 bonus points added to your final course score6Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesSuccess in an (Any!) Economics CourseTo do well in Economics, you need to be able to do 3 things well (in conjunction):1. Think Mathematically: Don’t be afraid of equations!2. Think graphically!3. Abstract Logic! (Often the hardest part)7Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesThe Keys to Success in this Course…• Read lecture notes and textbook on topics ahead of time Think about “what happens if … ?” It’s the only real way to grasp concepts in economics – and economics itself!• Don’t be shy! Come to class ready to ask questions! Use lecture time to “fill in the gaps”• Practice and Discuss!!!• Utilize my office hours!! Come chat with me about concepts you are having trouble with, ideas you haven’t grasped fully etc.8Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesA Definition of Economics• Economics is the study of the use of scarce resources to satisfy unlimited human wants9Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesBig Ideas of Economics• Microeconomics– Tradeoffs– Margins and incentives– Voluntary exchange is efficient– Market failures• Macroeconomics– For the whole economy: expenditure = production– Productivity– Inflation– Unemployment10Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesMicroeconomics• Microeconomics is the study of the decisions of individual people and businesses and the interaction of those decisions in markets• Studies:– Prices and Quantities– Effects of Regulation and Taxes11Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesMacroeconomics• Macroeconomics is the study of the national economy and the global economy• Studies:– Average prices and total employment, income and production– Effects of taxes, government spending, budget deficit on total jobs and incomes– Effects of money and interest rates12Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesEconomics… Science or Art?• Theory– Model of how the world works– Assumptions– Equations represent real world idease.g. minimum wage causes unemployment• Empiricism– Use statistics, data, computers to measure and test theorye.g. see if states with higher minimum wage have higher unemployment13Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesPositive vs. Normative Statements• Positive statements are about what is– Can be proven right or wrong– Can be tested by comparing it to facts• Normative Statements are about what ought to be– Depends upon personal values and cannot be tested• Example: Global Warming– “Our planet is warming up because of increased C02in the atmosphere”– “We ought to cut back on our use of carbon-based fuels such as coal and oil”14Professor Yamin Ahmad, Principles of Macroeconomics – ECON 202Note: These notes are incomplete without having attended lecturesObstacles and Pitfalls in Economics• Unscrambling Cause and Effect– ceteris paribus: all other things being equal• Fallacy of Composition– False statement that what is true of the parts is also true of the whole & vice versa• Post Hoc Fallacy– “after this, therefore because of this”– Error of reasoning that a first event causes a second event• Correlation vs. Causation15Professor Yamin Ahmad,