1. Econ “The Economist’s Toolbox”
Unit 1, Chapter 1, Section 4

2. Objectives Demonstrate how and why economists use economic models
understand how and why economists use statistics, charts, tables, and graphs
compare macroeconomics to microeconomics
contrast positive economics with normative economics

3. Economic Models
How: by creating a simplified representation of complex economic forces
Why: helps economists explain why things are as they are or predict future economic activity

4. Statistics, Charts, Tables, & Graphs
How: by showing numbers in relation to other numbers
Why: revealing patterns in the data
examples: charts, line graphs, bar graphs, & Pie graphs

5. Macroeconomics and Microeconomics
Units of Study: economic growth; economic stability; international trade
Topics of Interest: money, banking finance; government taxing and spending policies; employment and unemployment; inflation
Units of Study: consumer markets; business markets; labor markets
Topics of Interest: markets, prices, costs, profits, competition, government regulation; consumer behavior; business behavior

6. Positive Economics and Normative Economics
studies economic behavior as it is; using the scientific method to observe data, hypothesize, test, refine, and continue testing
involves judgments of what economic behavior ought to be; it goes beyond the facts to to ask if actions are good

7. Adam Smith lived 1723-1790 wrote The Wealth of Nations
laid the foundation for modern economics
the word economics was not in his book at all
reasoned that people behave in ways that satisfy their economic self-interest
both buyer and seller benefit from each transaction, meaning an “invisible hand” guides the marketplace