1. MODULE 1/2- WHAT IS ECONOMICS? by: J.A.SACCO

2. What Is Economics? What is Economics? CHOICES!!!

3. What Is Economics? Compile a list of five goods/services you have bought in the last 2 days? What choices did you make in purchasing those goods and services? What choices were economic?

4. Macroeconomics vs. Microeconomics

6. The Economic Person: Rational Self-Interest Economics is based on the belief that individuals act as if motivated by self-interest and respond to opportunity for gain. “People do what is in their own best interests ”

7. “Rationality Assumption” People will not intentionally make decisions that would leave them worse off. People respond to rewards called INCENTIVES!! Why are INCENTIVES important?

8. Economics as a Science? Models in Economics An economic model doesn’t need to be an exact replica/just needs to be realistic!

9. Models and Assumptions Assumptions are a shorthand for reality. Models must be based on a set of assumptions---Makes the model valid! “Ceteris Paribus Assumption”? Once we believe the model is a valid representation of the world, it can predict real world phenomena.

10. The Business Cycle

11. Positive Versus Normative Economics Positive Economics Purely descriptive statements or scientific predictions- Factual statements! Normative Economics Analysis involving value judgments- Should…