ECN204 Notes Chapter 2.doc

33 views1 pages
22 Oct 2012
Department
Course

For unlimited access to Textbook Notes, a Class+ subscription is required.

ECN204 NotesChapter 2
Economists play two roles
oScientists – try to explain the world
Scientific Method – dispassionate development and testing of
theories about how the world works
Make positive statements (attempt to describe the world as it is)
Can be confirmed and/or refuted
oPolicy Advisors – try to improve it
Make normative statements (attempt to prescribe how the world
should be)
Cannot be confirmed and/or refuted
Assumptions
oUnrealistic, simple to learn, gives useful insights about the real world
oModel – a highly simplified representation of a more complicated reality
(used to study economic issues)
Microeconomics
oStudy of how households and firms make decisions and how they
interact in markets
Macroeconomics
oStudy of economy-wide phenomena (e.g., inflation, unemployment,
economic growth, etc.)
Why Economists Disagree
oOften give conflicting policy advice
oSometimes disagree about the validity of alternative positive theories
about the world
oMay have different values, therefore different normative views about
what policy should try to accomplish
oMany propositions about which most economists agree
Chapter Summary
oAs scientists, economists try to explain the world using models with
appropriate assumptions
oTwo simple models are the Circular-Flow Diagram and the Production
Possibilities Frontier
oMicroeconomics studies the behaviour of consumers and firms, and their
interactions in markets. Macroeconomics studies the economy as a
whole.
oAs policy advisors, economists offer advice on how to improve the world
Unlock document

This preview shows half of the first page of the document.
Unlock all 1 pages and 3 million more documents.

Already have an account? Log in

Get access

Grade+
$10 USD/m
Billed $120 USD annually
Homework Help
Class Notes
Textbook Notes
40 Verified Answers
Study Guides
1 Booster Class
Class+
$8 USD/m
Billed $96 USD annually
Homework Help
Class Notes
Textbook Notes
30 Verified Answers
Study Guides
1 Booster Class