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SC ECON 221 - Chapter 1: Big Ideas (cont.)

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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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