ECON 0110 Lecture Notes - Lecture 99: Discouraged Worker, Aggregate Demand, Underemployment
Document Summary
Microeconomics: examines the behavior of individual consumers, workers, firms, and industries. Macroeconomics: examines the behavior of the overall us economy. Employment act of 1946- (cid:862)it is the (cid:272)o(cid:374)ti(cid:374)ui(cid:374)g poli(cid:272)(cid:455) a(cid:374)d responsibility of the federal government to use all pra(cid:272)ti(cid:272)a(cid:271)le (cid:373)ea(cid:374)s to pro(cid:373)ote (cid:373)a(cid:454)i(cid:373)u(cid:373) e(cid:373)plo(cid:455)(cid:373)e(cid:374)t, produ(cid:272)tio(cid:374), a(cid:374)d pur(cid:272)hasi(cid:374)g po(cid:449)er(cid:863) Major macroeconomic policy goals: promote maximum production (economic growth, promote maximum purchasing power (stable prices, promote maximum employment, smooth out business cycle fluctuations. Rational self interest: people chose actions which they perceive to be in their own best interest. Economic policy: government actions to influence the economy. Fallacy of false cause: post ho(cid:272), ergo propter ho(cid:272), (cid:862)after this, therefore (cid:271)e(cid:272)ause of this(cid:863) Fallacy of composition: what holds for one person does not necessarily hold for everybody. Ceteris paribus fallacy- the other things being equal fallacy: An increase in interest rates will lead to decreased borrowing. Example: if gasoline prices increase, people will switch to smaller cars.
