1 INTRODUCTION. Copyright © 2004 South-Western/Thomson Learning Economy...... The word economy...
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Transcript of 1 INTRODUCTION. Copyright © 2004 South-Western/Thomson Learning Economy...... The word economy...
1
INTRODUCTION
Copyright © 2004 South-Western/Thomson Learning
Economy. . .
. . . The word economy comes from a Greek word for “one who manages a household.”
According to Samuelson,
Economics is the study of how socities use scarce resources to produce valuable commodities and distribute among different people.
Copyright © 2004 South-Western/Thomson Learning
Microeconomics and Macroeconomics
• Microeconomics focuses on the individual parts of the economy.
• How households and firms make decisions and how they interact in specific markets
• Macroeconomics looks at the economy as a whole.
• Economy-wide phenomena, including inflation, unemployment, and economic growth
Copyright © 2004 South-Western/Thomson Learning
THE ECONOMIST AS POLICY ADVISOR
• When economists are trying to explain the world, they are scientists.
• When economists are trying to change the world, they are policy advisor.
Copyright © 2004 South-Western/Thomson Learning
POSITIVE VERSUS NORMATIVE ANALYSIS
• Positive statements are statements that focus on facts and cause and effect relationships. Called descriptive analysis
• Normative statements are statements about how the world should be. Called prescriptive analysis
Copyright © 2004 South-Western/Thomson Learning
SUBJECT MATTER OF ECONOMICS
• Economic activities
• Economic systems
• Economic policies
Copyright © 2004 South-Western/Thomson Learning
ECONOMIC ACTIVITIES
• Production• Consumption• Exchange
Objective of economic activities: 1.proper allocation of resources 2.efficient use of resources
Copyright © 2004 South-Western/Thomson Learning
ECONOMIC SYSTEMS
The economic system is composed of people and institutions, including their relationships to productive resources. Examples of contemporary economic systems include :
CAPITALIST ECONOMY
SOCIALIST ECONOMY
MIXED ECONOMY
Copyright © 2004 South-Western/Thomson Learning
ECONOMIC POLICY
• A policy is a deliberate plan of action to guide decisions and achieve rational outcome(s).
• Economic Policy are the actions that the government takes in economic field.
• e.g. Fiscal policy, monetary policy, trade policy, policy of setting interest rates.
Copyright © 2004 South-Western/Thomson Learning
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