ECON 105 Lecture Notes - Lecture 2: Business Cycle, Graphical Model, Normative Economics

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graymouse127

14 Oct 2015

School

Simon Fraser University

Department

Economics

Course

ECON 105

Professor

All

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ECON 105 Full Course Notes

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Example: newton"s development of the theory of gravity after observing an apple falls from a tree. Assumptions simplify the complicated reality and make it easier to understand. Graphical model economists use diagrams and graphs to explain how economic variables are related and how participants in the economy interact with one another. Mathematical modela mathematical model is a formulation or equation that describes how economic variables are related. Verbal model a verbal model uses words to describe how economic variables are connected. Production possibilities frontier (ppf) = a graph that shows the combinations of output that an economy can possibly produce given the available factors of production and the available technology. Recall: the opportunity cost of an item is what must be given up to obtain that item. Moving along a ppf involves shifting resources (e. g. , labour) from the production of one good to the other. Society faces a tradeoff: getting more of one good requires sacrificing some of the other.

Related Questions

In any economic system, scarce resources have to be allocated among competing uses. Market economies harness the forces of

	a.	government to allocate scarce resources.
	b.	supply and demand to allocate scarce resources.
	c.	nature to allocate scarce resources.
	d.	credit cards to allocate scarce resources.

The price elasticity of demand measures the

magnitude of the response in quantity demanded to a change in price.

size of the shortage created by the increase in demand.

direction of the shift in the demand curve in response to a market event.

responsiveness of quantity demanded to a change in income.

If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

	a.	1.2%.
	b.	2%.
	c.	0.25%.
	d.	12.5%.

Which of the following is the least likely to be a competitive market?

	a.	ice cream
	b.	soybeans
	c.	cable television
	d.	new houses

Economists speaking like policy advisers make

	a.	claims about how the world is.
	b.	descriptive statements.
	c.	normative statements.
	d.	More than one of the above is correct.

Economists speaking like scientists make

	a.	positive statements.
	b.	prescriptive statements.
	c.	claims about how the world should be.
	d.	More than one of the above is correct.

A decrease in the price of a good will

	a.	increase quantity supplied.
	b.	decrease supply.
	c.	decrease quantity supplied.
	d.	increase supply.

greenchimpanzee604

1. Scarcity in economics means: we do not have sufficient resources to produce all the goods and services we want. the wants of people are limited. there must be poor people in rich countries. shortages exist in nearly all markets. You like to read Vogue and Sports Illustrated. You have only $5 to spend, so you only buy Sports Illustrated. The statement that best represents this economic concept is: resources are scarce. the real cost of something is what you must give up to get it. positive economics explains how the economy actually works. economic models are used to answer âwhat ifâ questions. . If the state government allocates additional spending on education, the opportunity cost is: zero. the dollar amount of the additional spending. considered only if additional taxes need to be raised to fund the spending. measured in terms of the best alternative use for that money. For a student that owns his or her own home and doesn't plan to live in the dorm the cost of going to college is: tuition and the cost of housing. tuition, the cost of housing, and the cost of books. tuition, the cost of books, and forgone income. forgone income only. Keynesian economics stressed: the importance of total spending. the self-correcting power of free markets. the long run. that the Depression should run its course to bring down the high cost of living. The economic policy that uses changes in government spending and taxes to affect the overall spending in the economy is known as: a tax-and-spend policy. monetary policy. fiscal policy. free-trade policy. When building a model, economists: simplify reality in order to highlight what really matters. attempt to duplicate reality in all of its complexity. ignore the facts and instead try to determine what the facts should be. are careful to avoid the scientific method. Which is a normative statement? The minimum wage has not kept pace with inflation. The minimum wage is an important tool in fighting poverty and should be increased. The minimum wage can create higher unemployment for teens and unskilled workers. A higher minimum wage is expected to increase the price of a fast-food cheeseburger. Which is an example of a positive statement? The poverty rate should be 4%. A high rate of economic growth is a more important economic goal than a low rate of unemployment. The federal government pays for 46% of U.S. health care costs. Everyone in the country should be covered by national health insurance. Economists may disagree about policies because they: may approach the issue using the same sets of values. may use different economic models. enjoy disagreeing with each other. only consider issues in positive economics.

Description
Thinking like an economist can be helpful in your daily life. If you understand basic economic principles such as incentives, opportunities, and risks and rewards, you can make better decisions. Learning to view the world as an economist can also help you make decisions about which credit card to apply for, what loan to take, or which health care plan is the best.

For this assignment, you will participate in a discussion about the two roles of economists in the context of a specific scenario. When responding to the discussion questions, be sure to reference course materials to support your conclusions and opinions. You should do the same whenever you respond to another personâs discussion post. By doing so, you not only make a stronger case, but better support your own learning.

Scenario
Imagine that a group of advisors to the president has suggested providing a tax cut for the middle class in order to stimulate the economy and reduce unemployment. The president has asked for your analysis of this proposed tax cut.

Instructions

In a post to the discussion, respond to the following:

Describe how an economic scientist would approach the tax cut recommended by the advisors in the scenario you just read. What are some economic factors that the economic scientist would consider when crafting his or her statement on the tax cut proposed?

Describe how an economic policy advisor would approach the same tax cut and provide the reasoning behind the position.

Remember to think like an economis, even if it goes against your own opinions about whether a tax cut is a good idea.

What economic principles does the tax cut involve?

What are some of the repercussions of the tax cut on the wealthy and do you think this is a positive or negative outcome? Why?

Do you think tax donations should be tax deductible even when it hurts government revenue?

salmonoyster595

ECON 105 Lecture Notes - Lecture 2: Business Cycle, Graphical Model, Normative Economics

ECON 105 Full Course Notes

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