ECON 221 1st Edition Lecture 2 Outline of Last Lecture I. Big Ideasa. Incentives Matterb. Good Institutions Align Self-Interest when they respond to incentivesc. Trade-Offs are everywhered. Thinking on the MarginOutline of Current Lecture I. Big Ideas (cont.)a. The Importance of Wealth and Economic Growthb. Institutions Matterc. Final Big IdeasCurrent LectureChapter 1: Big Ideas (cont.)- The Importance of Wealth and Economic Growtho Wealth matters, but what determines economic growth? Productivity or the quantity of goods and services produced from each unit of labor input- More cars, TV sets- longer life expectancy, higher rates of Infant survival- Better education, women’s rights, political liberty Public policies to boost productivity- Institutions Mattero People respond to incentives when markets exist Property rights ensure that markets function properly Market economies need institutions to enforce property rights so individuals can own and control scarce resources- Police and courtso Ex. farmer, restaurant, DVD company- Final Big Ideaso Macroeconomic lessons: Appropriate Monetary and Fiscal Policies can smooth out normal booms and busts of the macro economyThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. Can make recessions shorter and less deepo Inflation occurs when the government prints too much moneyo Central Banking is a hard jobo Economics is fun, pays a lot! Teaches you how to manage a scarce resource:
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