Wissink Economics 301- Intro

About Economics & This Course So what is this course about? (And what is it not about?) My working title: Advanced Introduction to Applied Microeconomic Theory

About Economics & This Course Theory: We will construct models. Look at the world and decide what it is we want to explain or predict identify important variables state assumptions that govern the model make hypotheses analyze the model use the model to make predictions and then see if the model holds up under empirical scrutiny.

About Economics & This Course Economic(s): The study of the allocation of scarce resources to produce commodities to satisfy infinite human wants. Classic definition.

About Economics & This Course MACRO VS. MICRO Micro: Looks at small pieces of the puzzle, individual markets Three basic micro questions: What? How? For Whom? How will be decide? How will we like the final allocation?

About Economics & This Course Macro: the study of the determination of economic aggregates and how they relate to each other and how the government and the exogenous environment affects these aggregates Macro examines the factors that determine total national output, or total national product total national income price levels unemployment interest rate levels the business cycle

About Economics & This Course Applied: Where and when we can, we will apply what we are learning to the real world economy. Introduction: Getting you started, getting you familiar, getting you acquainted. Advanced: Will use math without apology.

Why Study Economics? Economics is everywhere. It’s requirement!? Prerequisite!? To help you understand how economists think and construct arguments. To understand how markets and the economy work. To create a foundation to help you differentiate good from bad analysis and policy prescriptions. To get a better understanding of the economics problems faced by modern societies: domestic and globally. To better understand the government's and an economy’s ability to: promote growth, maintain high levels of economic activity, maintain high levels of employment, maintain stable prices, and promote improved quality of life.

On Modeling & Constructing Theories Simplistic Model Construction Ockham’s Razor Evaluation of Models economics is a social science Two pitfalls to avoid: the fallacy of composition post hoc ergo propter hoc mistakes Positive vs. Normative analysis is ought to be