ECON 2HH3 Chapter 01: Chapter 01.pdf

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goldchinchilla614

8 Mar 2014

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Outline: what is macroeconomics, gdp, economic growth, and business cycles, macroeconomic models, microeconomic principles, disagreement in macroeconomics, lessons from macroeconomic analysis, understanding macroeconomic events. List the primary questions of interest in macroeconomics. Explain how microeconomic principles are used in macroeconomics. After studying this chapter, you will be able to. Explain how economic models are used to draw conclusions about how the macroeconomy works. Explain what we learn from macroeconomic macroeconomics analysis. What is macroeconomics: macroeconomics is the study of the behaviour of large collection of economic agents, it analyzes issues associated with long-run growth and business cycles. Long-run growth is the increase in productive capacity and average standard of living. Business cycles are the short-run fluctuations in aggregate economic activity. What is macroeconomics? (continued: microeconomics is concerned with the choices of economic agents such as households and firms, whereas macroeconomics is concerned with the overall effects on economies of the choices that these economic agents make.

Related Questions

Chapter 1 question 5, page 17
#5
(Micro Versus Macro) determine whether each of the following is primarily a microeconomic or a macroeconomic issue:
a. What price to charge for an automobile
b. Measuring the impact of tax policies on total consumer spending in the economy
c. A household's decision regarding how much to work each week
d. Designing a government policy to increase total employment
Chapter 1 question 11, page 18
#11
(marginal Analysis) the owner of a small pizzeria is deciding whether to increase the radius of the delivery area by one mile. What considerations must be taken into account if such a decision is to increase profitability?
Chapter 3 question 12, page 68
#12
( Objectives of the economic decision-makers) In economic analysis, what are the assumed objectives of householdâs, firms, and the government?
Chapter 3 question 15, page 69
#15
(Evolution of the household) Determine whether each of the following would increase or decrease the opportunity costs for mothers who choose not to work outside the home. Explain your answer.
a. Higher levels of education for women
b. Higher unemployment rates for women
c. Higher average pay levels for women
d. Lower demand for labor in industries that traditionally employ large numbers of women

jadeturtle271

. Vouchers to Pay Private School
Tuition
Two conditions that justify government intervention in a market are the presence of external benefits and equity concerns. Both of these issues are present in the case of primary and secondary education in the United States. Think about what education without government education would look like. In the absence of government intervention, all primary and secondary education in the US would be private. Public school districts would not exist. Parents would need to pay private firms (schools) to educate their children.

External benefits

If all education were private, itâs likely that people would buy too little education, from societyâs point of view. External benefits are one reason. When a child is educated, he or she benefits and we expect his or her parents to take those benefits into account when they purchase education. But there are additional benefits to society which parents may ignore. As people become more educated, they are less likely to be unemployed or be criminals and are more likely to volunteer and vote. The presence of these external benefits is an example in support for the government getting involved in education.

Equity

Many families in the United States have low incomes. Among all children in first through twelfth grades in 2001, 46% were from families with incomes below $40,000. Since the cost of private education would be an important share of these familiesâ incomes, most Americans would be concerned about the fairness of relying on markets to decide how much education children receive. Current spending by these families on private education provides some support for this concern. Of all children in private school in 2001, only 25% were from families with incomes below $40,000. Therefore, equity concerns are another example in support for government getting involved in education.

Providing vs. producing education

Most economists think external benefits and equity concerns justify government intervention in education. But it is important to distinguish between government production of education and other forms of government intervention. At the level of elementary and secondary education, K- 12 education, government intervention today mostly means production of education by local school districts. To benefit, children must attend public schools. But this is not the only form intervention could take.
There are other markets where government intervention takes the form of subsidizing peopleâs access to productsâthink of financial aid to college students, for example. Many people in the US think that government should move from producing education to subsidizing access.

One form that subsidy could take is government providing vouchers to parents. Parents would use the voucher to help pay for their childâs education in a private school. After it receives the voucher, the school would turn it in and be paid by a local or state government.

Today there is a lively debate between people who think K-12 education should be delivered publicly and people who think quality and efficiency would be higher if government provided vouchers and the education was delivered by private schools. Some of these quality and efficiency arguments can be based on material we covered this week. Price competition between private schools will pressure each one to produce efficiently. Competition for students will lead private schools to offer programs of interest to parents and their children.

Answer the questions below and make use of the sources supplied. Be sure to cite you sources in your answers.

1. Explain whether a potential exit by students with vouchers will lead to the improvement of public schools. 2. Discuss whether the implementation of vouchers will lead the best students to leave public school, which could lead to a decline in education for the students left behind in the public schools. 3. Consider what might happen to the students who use vouchers to leave public schools in order to attend private schools. How might their academic performance change as a result of switching? 4. Finally, think about the impact of a voucher system on the students in an urban setting. Describe whether all families would have an equal opportunity to access education.

Your final product will be a paper that: ? Addresses each of the four questions above in total. ? Is APA formatted. ? The body is to be 2 pages minimum.

The requirements for your assignment are: 1. Answer each question fully 2. Define the overall subject of each question. 3. Cite at least three (3) resources from this weekâs materials.

How much is a college education worth? In the text, we supposed a college education raised a person's wage by $30,000 per year, from $40,000 to $70,000. Assume the interest rate is 3% and there is no growth in wages, then answer the following.

a) Suppose you are a high school senior deciding whether or not to go to college. What is the present discounted value of your labor income if you forgo college and start work immediately?

b) As an alternative, you could pay $20,000 per year in college tuition, attend for 4 years, and then earn $70,000 per year after you graduate. What is the present discounted value of your labor earnings under this plan? (Compute this value from the point of view of a high school senior.)

c) Discuss the economic value of a college education.

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ECON 2HH3 Chapter 01: Chapter 01.pdf

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