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Uncle Sam wants you to do better in economics. Universities awarded 16,141 economics degrees last year at 272 colleges & universities which is up 40%

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Presentation on theme: "Uncle Sam wants you to do better in economics. Universities awarded 16,141 economics degrees last year at 272 colleges & universities which is up 40%"— Presentation transcript:

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2 Uncle Sam wants you to do better in economics.

3 Universities awarded 16,141 economics degrees last year at 272 colleges & universities which is up 40% in five years. There has been a clear explosion of economics as a major, particularly at the top colleges. Universities awarded 16,141 economics degrees last year at 272 colleges & universities which is up 40% in five years. There has been a clear explosion of economics as a major, particularly at the top colleges. Econ, Econ, Econ, Econ, I want to major in Econ. WSJ 2006 Economics At New York University, the economics major has doubled in 10 years. At 800, it is now the most popular major. Economics is also the number one major at Harvard (964 students), Columbia (up 67% in 5 years), Stanford, Penn, Princeton, Chicago (24% of graduating class), & 2 nd at Brown, Yale, and University of California at Berkeley. At New York University, the economics major has doubled in 10 years. At 800, it is now the most popular major. Economics is also the number one major at Harvard (964 students), Columbia (up 67% in 5 years), Stanford, Penn, Princeton, Chicago (24% of graduating class), & 2 nd at Brown, Yale, and University of California at Berkeley. The increase in the numbers is the result of many students seeing The increase in the numbers is the result of many students seeing economics as the best vehicle promising good pay & se curity. economics as the best vehicle promising good pay & se curity. Students realize that understanding economics has become a Students realize that understanding economics has become a fundamental necessity of life. Economics rising popularity is fundamental necessity of life. Economics rising popularity is even global. Econ majors in Poland have doubled in 6 years. even global. Econ majors in Poland have doubled in 6 years. In Russia, econ majors have jumped from 18% of students to 31%. The chairman of the economics department at London School of Economics says economics popularity is at an all time high. In Russia, econ majors have jumped from 18% of students to 31%. The chairman of the economics department at London School of Economics says economics popularity is at an all time high. [up 40%]

4 1.Computer Engineering $104,000 2.Economics$97,800 3. 3.Electrical Engineering$96,100 4. 4.Computer Science $94,000 5.Mechanical Engineering$88,100 6. 6.Finance$84,400 7. 7.Mathematics$82,200 8.Civil Engineering$81,700 9.Nurse Practitioner$81,300 10. Political Science$74,400 11. Marketing$72,300 12. Accounting$72,500 13. History$68,000 14. Physical Therapist$66,000 15. Business Management$64,900 16. Communications$64,300 17. English$62,300 18. Biology$60,000 19. Sociology$55,900 20. Graphic Designs$54,700 21. Psychology$54,000 22. Criminal Justice$53,400 Econ,Econ Payscale.com

5 Heads of State George H. W. Bush, US President (Yale) Ronald Reagan, US President (Eureka College) Gerald Ford, US President (University of Michigan) Ernesto Zedillo, former President of Mexico (Yale University, PhD) Carlos Salinas de Gortari, former President of Mexico (Harvard University, PhD) CEOs Ted Turner, CEO CNN, Atlanta Braves/Hawks (Brown) Scott McNealy, CEO, Sun Microsystems (Harvard) Donald Trump, Real Estate/TV Mogul (University of Pennsylvania- Wharton) Warren Buffet, Financier (Columbia School of Business, Master's in Economics) Sam Walton, Founder of Wal-Mart, (University of Missouri) Legislators, Justices, and Government Officials Phil Gramm, US Senator (University of Georgia, PhD) Sandra Day-O'Connor, US Supreme Court Justice (Stanford) Barbara Boxer, US Senator (Brooklyn College)Actors/Entertainers Arnold Schwarzenegger, Actor/Governor (University of Wisconsin) Young M.C., Singer (University of Southern California) Danny Glover, Actor (University of San Francisco) Paul Newman, Actor (Kenyon College) Cate Blanchett, Actress (Melbourne University) Lionel Richie, Singer/Songwriter (Tuskegee University) Ben Stein, Actor/political speechwriter (Columbia University) Professional Athletes John Elway, NFL quarterback (Stanford) Tiger Woods, Golfer (Stanford) Jennifer Azzi, WNBA guard Utah Starzz (Stanford) Lenny Wilkens, NBA Coach/Hall of Famer (Providence College) Bill Belichick, NFL Head Coach--Patriots (Wesleyan University) Michael Johnson, Olympic Gold Medalistt, (Baylor)

6 Heres a look at the weight placed on four major college admission class ranksteady decline factors. Only class rank has shown a steady decline. They would rather see a C in AP Econ than an A in regular econ. They then know you can do college work. Only about 43% of all entering college freshmen ever graduate.

7 No horn of plenty Scarcity Choices What is given up ECONOMICS Unlimited Needs and Wants Demand In other words THIS is not the case. Choices L imited R esources Supply Or, the study of how people make choices to get what they want

8 ECONOMICS - science of scarcity choices - the study of the choices people make in an effort to satisfy unlimited needs and wantslimited resources their unlimited needs and wants from limited resources.

9 Objectives: economics 1. Be able to define economics. Economics Economics- the study of the choices people make in an effort to satisfy their unlimited wants from limited resources. laws 2. What are economic laws. micro & macroeconomics 3. Differentiate between micro & macroeconomics. Ceteris paribus 4. Ceteris paribus & why it is used[isolating 2 variables] Positivenormative 5. Positive(descriptive) & normative(prescribing) econ. Eight econ goals 6. Eight econ goals (conflict with-FE & PL; complementary- econ growth & FE ) Pitfalls to Clear Economic Thinking 7. Pitfalls to Clear Economic Thinking such as the fallacy of composition & post hoc fallacy direct relationship positive sloping curve 8. Explain a direct relationship (positive sloping curve) inverse 9. Explain and illustrate an inverse relationship between two variables negative sloping curve and identify a negative sloping curve. independent (cause-induces) dependent (effect-responds) 10. Identify independent (cause-induces) & dependent (effect-responds) variables. Body weight Ave. miles jogged Body Weight Calories Consumed What great branches! What a beautiful forest! [set a reese paar a bus]

10 Food, clothing, shelter, Chrysler 300, mansion, Nintendo DSI, jewelry, iPod, projector, digital camera, good health, children, camcorder, laptop warmth, indoor plumbing, rollerblades, a sense of personal worth, Plasma TV, literacy, higher economics grade, iPhone 3GS, Flip video, Wii iPad, Motorolas Xoom Need those first three to survive. Unlimited Human Wants Limited Resources Land, L abor, C apital, E ntrepreneur R ent, W ages, I nterest, P rofits

11 Economicsmost discussed Economics is the academic discipline most discussed by the general public. least understood [ Language of graphs ] It is also one of the least understood. [ Language of graphs ] The economists lab is the real world. They dont conduct controlled laboratory experiments. They are predicting human behavior. Physicists explore the physical world. Economics as a social science looks Physicists explore the physical world. Economics as a social science looks at the behavior of people in the marketplace. at the behavior of people in the marketplace. Economics is not an exact science but it gives likely results.

12 [The economy is the patient suffering from inflation or unemployment.] [The economy is the patient suffering from inflation or unemployment.] Diagnosis Prognosis Treatment Diagnosis Prognosis Treatment Fact & theory [objective-can be tested] Policy is judgment [subjective-opinion] Positive Economics Normative Economics Positive Economics Normative Economics ACL has torn Repair the ACL R ehab brace/crutches

13 When you pick Mr. or Ms. Right, you have 3.5 billion to pick from. When you pick Mr. or Ms. Right, you have 3.5 billion to pick from. Were looking for the perfect man. What characteristics are you not going to want (abstract) in picking Mr. or Ms. Right. There is the woman I want. She doesnt even have to like sports.

14 Ceteris paribus all else held constant Ceteris paribus [Latin for all else held constant] is the most everything else being equal. important assumption in economics. Means everything else being equal. Models relationship between X and Y Models allow you to reason about the relationship between X and Y intrusion of Z without the intrusion of Z. disagreementsquantitative magnitudes The disagreements occur over the quantitative magnitudes. [Dont tax peoples savings and they will save more. (how much more)] Economic Models Economic Models (theories) may be expressed 4 ways. 1. Verbal statements 2. Pictorially 3. Graphically 4. Mathematical equations Example: If interest rates were lowered, more houses would be sold. NO Law of Demand Demand [set a reese paar a bus] Methodology Methodology [in studying Economic Theory]

15 Economic Growth 1. Economic Growth [Increase in Real GDP or per capita GDP] 3% 3% annual growth will increase our standard of living. 1929-Per capita=$ 792$430 2011-per capita= $ 48,000 1929-Per capita=$ 792 ; 1933-Per capita= $430 ; 2011-per capita= $ 48,000 Full Employment 95-96 % 2. Full Employment – about 95-96 % employment is full 198210.8% employment. In 1982, unemployment was 10.8% [12 M unempl.] Doing the best with the resources we have. Economic Efficiency 3. Economic Efficiency – resources are scarce so they must be used wisely. Wasting resources means fewer goods and services can be produced.

16 . 4. Price Level Stability 4. Price Level Stability – sizable inflation or deflation should be avoided. We had over 10% in 73, 79, & 80. Inflation 2% in the 1950s, 2.3% in 1960s 7.4% in 80s. was 2% in the 1950s, 2.3% in 1960s and 7.4% in 80s. A person making $25,000 a year at age 30 would need (with average inflation of 5%) $125,000 a year at age 65 to have the same standard of living. 1972 --------82; 1982-------2011 1972 --------82; 1982-------2011 In 1945, $1.50 bought what $1.00 did in 1860. Today, it takes $11 to buy what $1 bought in 1945. It took $2.31 in 1982 to buy what $1 bought in 1972. It took $2.31 in 1982 to buy what $1 bought in 1972. In 2011, it took $2.37 to buy what $1 bought in 1982. Reasonable inflation, 1-2% is OK.

17 HYPERINFLATION in Brazil [1988-1994] 1988 – 1,300%1991 – 1,000% 1989 – 2,900%1992 – 1,260% 1990 – 44%1993 – 1,740% Prices in 1994 were 4 million times higher than in 1988. Only $140 million per pair Why did Brazils Inflation increase so much? Brazils inflation1988 to 1994 If we had Brazils inflation from 1988 to 1994: $35 Blue jeans $140 million 1. $35 Blue jeans would increase to $140 million per pair. Gas$2.35$5 2. Gas would increase from $2.35 to $5 million per gallon. $20 pizzamovie $80 million 3. $20 for a pizza and movie would increase to $80 million. One new real2,750 of the old reals. 4. One new real was exchanged for 2,750 of the old reals.

18 A n Equitable Distribution of Income 5. A n Equitable Distribution of Income. One group shouldnt have extreme luxury while another is in stark poverty. The richest 1%(3 mil.) have as much total income after taxes [average $400,000 a year as the bottom 40% [100 million people]. The richest 1% have greater wealth than the bottom 90% of the population.

19 Personal Income (%) 3.4 % 8.6 % 14.5 % 22.9 % 50.5 % Lowest 20% Income Group 3 % [ only 3 % graduate from college] Second 20% Income Group 4.6 % [only 4.6 % graduate from college] Middle 20% Income Group 12 % [only 12 % graduate college ] Fourth 20% Income Group 25 % [ 25 % graduate from college] 51 % H ighest 20%[ over $100,000 ] [ 51 % graduate col.] Only 1 in 7 within this group even works. Income differences are caused by differences in IQ, energy, health, social skills, character, ambition, physical attractiveness, talent, and luck.

20 You are free to make your own economic decisions: – –Choose your job – –Choose where and when you work – –Work for yourself or someone else – –Leave your job and to move to another job – –Free to buy what we want Businesses are free to: – –Choose which workers they want – –Figure out how much business they want to do – –Businesses are free to sell what they want

21 . E conomic Security 7. E conomic Security – provision should be made for those not able to take care of themselves – handicapped, disabled, old age, chronically ill, orphans. Protection from lay-offs [unemployment insurance]. Also no discrimination. 43 million Americans have some type of disability. A. Hearing impaired: 22 million (including 2 million deaf) B. Totally blind: 120,000 (Legally blind: 60,000) C. Epileptic: 2 million D. Paralyzed: 1.2 million D. Paralyzed: 1.2 million E. Developmentally disabled; 9.2 million F. Speech impaired: 2.1 million G. Mentally retarded: up to 2.5 million H. HIV infected: 900,000 Social Security and Medicare provide security for older people. Social Security and Medicare provide security for older people. Balance of Trade $400 billion a year complementary economic growthF.E. ] conflict F.E.price level stability 8. Balance of Trade. O ver $400 billion a year the last few years. Some of these goals are complementary [ economic growth & F.E. ] and some conflict [F.E. and price level stability].

22 Positive Economics Normative Economics 1. Can 1. Cannot 1. Can be tested1. Cannot be tested 2. Scientific 2. Value judgment 3. In 3. Ought to be 3. In the economy3. Ought to be in the economy Positive [Scientific] v. Normative [ Prescriptive (personal) ] [ describingjust the facts] v. [ the economist being a policymaker] 1. The economy grew at 3.6%.1. The economy ought to grow more. 2. Unemployment is 9,5%. 2. Unemployment is too high. Positive economics [ observable, factual, & testable economic events – trade deficit, budget deficit, etc.] – deals with straight facts on economic behavior and doesnt give opinions or value judgments. It is concerned with what is, was, or will be. [objective - not influenced by emotions] [Statements that are verifiable] Straight facts In my opinion …

23 Normative E conomics – expresses opinions or value judgments. It is concerned with what ought to be and uses words like should, needs, and too. Unemployment ought to be reduced. These opinions cannot be proved or disproved. We should protect the auto industry from foreign competition, Normative involves judgments and prescriptions for preferred courses of action. [ Subjective – influenced by emotions ] Most of the disagreements among economists involve normative economics. Ideally, value judgments are involved at the policy level only. Positive Economics Normative Economics 1. In the economy 1. Ought to be in the economy 2. Scientific 2. Value judgment 3. Can be tested3. cannot be tested Descriptive analysis Prescriptive analysis

24 Positive or Normative? Answers: 1. N 2. P 3. N 4. P 5. N 6. N 7. N 1. It is too cold to play football today. 2. Gross Domestic Product grew 4% last year. 3. The temperature is too cold today. 4. The temperature is 92 degrees today. 5. The humidity is too hot. 6. People who are unemployed are just too lazy to work. 7. Suzie RahRah should be friendlier to me this time. NOT After turning me down 3 times, Susie RahRah should be friendlier to me this time.

25 Beautiful, beautiful forest!. Beautiful leaf! MACROECONOMICS... MICROECONOMICS...

26 Macroeconomics telescope Macroeconomics – economics thru a telescope. whole bowl of macaroni & cheese Ex: Studying whole bowl of macaroni & cheese. Microeconomics microscope Microeconomics – economics thru a microscope. one macaroni noodle Ex: Studying one macaroni noodle.

27 Macro economy 1. Macro [national] economics – concerned with the economy as a whole as a whole or with aggregates – like government, business sectors, or households. Macroeconomics is concerned with an overview of the economy overview of the economy. forest, not the trees, Macro examines the forest, not the trees, leaves, or specific pieces of bark. leaves, or specific pieces of bark. It gives birds-eye view of the economy. us a birds-eye view of the economy.. Micro specific 2. Micro [details of the big picture] – concerned with specific economic units economic units or individual markets under a microscope. Emphasis is on individual households, industries, or firms [like the # of workers employed by Ford] [C oncerns the components of the economy] trees, leaves, & pieces of bark, Micro examines the trees, leaves, & pieces of bark, rather than the forest.worms-eye rather than the forest. It gives a worms-eye view view of a specific component of our economy. Great Forest! Beautiful bark!

28 Macro Micro Macro [large ](telescope) whole economy [economy-wide issues] Micro [ small ]( microscope ] segment of the economy [issues in the economy]. Production Production MicroeconomicsMacroeconomics How much steelTotal industrial output How much office spaceGross Domestic P roduct How many carsTotal decline during recession Prices Prices Price of individual goodsAggregate price level Price of medical careConsumer Price Index Apartment rentsRate of inflation Employment Employment Jobs in the steel industryTotal number of jobs # of employees in a firmEconomys unemployment # of doctors/accountants# of discouraged workers Check out those pieces of bark!. Beautiful, beautiful forest!

29 I s the f ollowing Micro or Macro ? I s the f ollowing Micro or Macro ? 1. The price of digital cameras increased 5% last year. 1. The price of digital cameras increased 5% last year. 2. Unemployment was 5.4% for the U.S. workforce. 2. Unemployment was 5.4% for the U.S. workforce. 3. Unemployment in the auto industry was 8% last year. 4. Duck N ational Bank lowered its interest rates on CDs to 8%. 5. The Consumer Price Index rose to 2.7% last year. 6. The computer industry laid off 8% of its workers last year. 7. The price of gasoline rose 25% last year. What forest, check these branches, limbs, and leaves.

30 Pitfalls To Sound Reasoning [ Chuckholes] Pitfalls To Sound Reasoning [ Chuckholes] Bias - preconceived beliefsnot warranted by facts 1. Bias - preconceived beliefs not warranted by facts. prejudices We tend to accept everything that reinforces our prejudices. We will not learn economics if we reject things before we understand them. Try to understand thingsinterferes Try to understand things first before you reject them. This interferes with objective analysis with objective analysis. Loaded terminology emotional terms leading 2. Loaded terminology - use of emotional terms leading to a nonobjective analysis[corporate profits - obscene; government to a nonobjective analysis. [corporate profits - obscene; government regulations - socialists; low wages - exploitive; flood control - regulations - socialists; low wages - exploitive; flood control - creeping socialism]. objectivity creeping socialism]. We must have objectivity. Definitions 3. Definitions - certain economic terms have different meanings than normal. Utility satisfaction A. Utility means satisfaction. Investment B. Investment means purchase of machinery, tools and factories machinery, tools and factories. Price ceilingsbelow equilibrium C. Price ceilings are below equilibrium. Price floorsabove equilibrium D. Price floors are above equilibrium.

31 [combining parts into a whole] [combining parts into a whole] true for the individual/part true for the group/whole. generalizing from the particular to the general. What is true for the individual/part is necessarily true for the group/whole. This is an error of generalizing from the particular to the general. A. The safest way for an individual leave a burning theater to leave a burning theater run for the nearest exit is to run for the nearest exit. Tariffs B. Tariffs are good for specific industries but not individuals. Too much money C. Too much money is good for you but not for everyone. stand up to see better D. You stand up to see better. Ill stand up so I can see better.

32 Fallacy of Composition Example: Texas & 7 other states benefithurts the 42 others Fallacy of Composition Example: When the price of oil goes up, Texas & 7 other states benefit, but it hurts the 42 others. Helped Hurt CO WY NM TX AK ND OK LA

33 . Post hoc it happened after thisergo therefore Post hoc [it happened after this], ergo [therefore] propter hoc because of this propter hoc [ because of this ]. This fallacy is saying event A precedes event B, A is because event A precedes event B, A is necessarily the cause of B. necessarily the cause of B. It is a fallacy that association or happenstance is causation. P ost H oc F allacy 5. P ost H oc F allacy –happenstance or or coincidence is not causality or coincidence is not causality. Ex: Ex: Last night I turned the TV on and the Heat were beating the Mavericks 47-40. They ended up losing the game 105-95, as the Mavs took the NBA Championship. Turning the TV on caused the Heat Lebron to lose. And now we know why Lebron James didnt go to college. He cant pass his finals.

34 Correlation v. Causation two events 6. Correlation v. Causation – because two events occur together [correlation], one event has caused the other. occur together [correlation], one event has caused the other. Ex 1: Super Bowl Indicator: The argument says that Ex 1: Super Bowl Indicator: The argument says that if the NFC rep or an original NFL t eam win the Super Bowl, if the NFC rep or an original NFL t eam win the Super Bowl, the stock market goes up. It has the stock market goes up. It has been right over 80 % of the time. been right over 80 % of the time. HelloWallStreet Ex 2: Hemline Indicator: The higher the skirts, the higher the market [ Wall Street would welcome the return of hot pants] In the roaring 20s, short Flapper dresses were the rage. The longer styles of the 1930s heralded a bear market of 90%. Rising stocks in the 60s coincided with the rise of the micro-mini, only to give way in the 70 s to more conservative dress lengths and a bear market. Even Charlies Angels wore their skirts long. During the booming 80s, womens business suits had broad shoulders & tiny skirts. During the 90s bull market, skirts got short again, this time with slits. Wall Street will love this.

35 Subjectivity - personal perception. econ gurus objectively subjectively As we become econ gurus we must look at economic issues objectively - not subjectively.

36 bird Is this a leftward-looking bird? anteloperabbit rightward-looking antelope ? Or a rabbit ?

37 Do You Change Your Mind?

38 Do You Change Your Mind Again?

39 Do you see an old lady or young girl ? Do you see an old lady or young girl ? The old womans nose is the young girls chin Hint: The old womans nose is the young girls chin.

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41 Optical Illusion. Stare at the picture & see if it doesnt look like you are looking at a giraffe - and yet there is really no giraffe. Oh!

42 . YELLOWBLUEO RANGE YELLOWBLUEO RANGE BLACKREDGREEN BLACKREDGREEN PURPLEY ELLOW RED PURPLEY ELLOW RED ORANGE GREENBLACK ORANGE GREENBLACK BLUERED PURPLE BLUERED PURPLE GREENBLUEO RANGE GREENBLUEO RANGE Left-Right Conflict Left-Right Conflict Your right brain tries to say the color but Your right brain tries to say the color but your left brain insists on reading the word. your left brain insists on reading the word. COLOR, Look at the Chart and say the COLOR, not the word.

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44 Are These items Moving? Or – Are They Perfectly Still? The pictures are used to test the level of stress a person can handle. Alleged criminalsspinning around madly senior citizensstanding still T he slower the pictures move, the better your ability of handling stress. Alleged criminals that were tested see them spinning around madly; however, senior citizens and kids see them standing still. None of these images are animated - they are perfectly still.

45 Focus on the Dot in the center & move your head backward and forwards.

46 green one 3. Look at the cross a bit longer and youll notice that all dots except the green one will disappear. pink dot green 2. Concentrate on the cross in the middle, after a while you will notice that this moving pink dot will turn green ! pink dot 1. Follow the moving pink dot & notice it doesnt change color.

47 Rotating Snakes Rotating Snakes Concentrate on the dot in the middle of the picture. If you see any rotation in the others, you are going to be a criminal.

48 Is this a Frog or a Horse?

49 The Day You Get Married

50 20 Years Later

51 Arnold Before Ill be back. Arnold After Oh!! My back Get out and dont come back! Maria

52 Economics is a little like optical illusions. Some times the economic concepts presented are easy to see & understand. Other times the concepts presented take more time to reveal themselves. appears Just like the illusions, you must be persistent and not give up until the concept appears to you. econ guru Then and only then will you become an econ guru, and look like one of these! Econ Gurus So, this is your goal, look like one of these!

53 INCOME (per week) $ 0 100200300400 $ 50 100150200250CONSUMPTION (per week) Table of Values Construction of Econ Graphs

54 INCOME (per week) $ 0 100200300400 $ 50 100150200250CONSUMPTION (per week) Table of Values Construction of Econ Graphs CONSUMPTION (C) $400 300 200 100 Vertical Axis

55 INCOME (per week) $ 0 100200300400 $ 50 100150200250CONSUMPTION (per week) Table of Values Construction of Econ Graphs CONSUMPTION (C) 0 100 200 300 400 0 100 200 300 400 INCOME (Y) $400 300 300 200 200 100 100 Vertical Axis Horizontal Axis

56 INCOME (per week) $ 0 100200300400 $ 50 100150200250CONSUMPTION (per week) Exists Between Consumption & Income CONSUMPTION (C) 0 100 200 300 400 0 100 200 300 400 INCOME (Y) $400 300 300 200 200 100 100 a bcd e a b c de A Direct Relationship... C 150 250

57 Direct ( positive ) Relationship Direct ( positive ) Relationship Independent variable –induces (cause); Dependent variable – responds (effect) Direct – 2 variables move in same direction. Econ, Econ Econ

58 TICKETPRICE $50 40 403020100048121620ATTENDANCE(thousands) Inverse ( Negative ) Relationship Inverse - 2 variables move in opposite directions TICKET PRICE (P) 0 4 8 12 16 20 0 4 8 12 16 20 ATTENDANCE IN THOUSANDS (Q) $50 40 40 30 30 20 20 10 10 a b c d e a b c f e f d I n Economics the independent variable can be on either axis.

59 Price of Bananas Purchases of Watches Consumption Divorce Rate Slope = Infinite Slope = Zero Increasing X has no effect on Y. Y X X Y Increasing Y has no effect on X. INFINITE and ZERO Slopes

60 Tell everything you know about each topic. You have only 6 seconds on each topic.

61 Economics 1. Economics ________________________________________ Needs 2. Needs include food, clothing, and (shelter/good grades in economics/ a date most Saturday nights). Theories and generalizations 3. Theories and generalizations (are/are not) the same thing. Abstraction 4. Abstraction – focusing on (two/three/four) variables to explain an event. favorable balance of trade 5. The goal of a favorable balance of trade (has/has not) been met in recent years. Economic theories 6. Economic theories are (specifics/generalizations) based upon observing all the facts. They are called laws, principles, generalizations or models. Economic laws 7. Economic laws that lead to policy are not true in every situation, but they are (useful/not useful) because they allow us to predict & therefore (control or adjust to events/not control or adjust to events). 8. Economic models (abstract/leave in) the complexities of the real world. Ceteris paribus 9. Ceteris paribus–other things being ________, that is all variables are constant except ___. Ceteris paribus model 10. Ceteris paribus model allows us to reason about the relation- ship between variables __ & __ without the intrusion of variable __. NS 1-10 constant 2 X Y Z The study of the choices people make in an effort to satisfy their unlimited needs and wants from scarce resources. their unlimited needs and wants from scarce resources.

62 hot to jog today./ The temperature is 88 degrees today.) value judgments 15. Ideally, value judgments are involved at the (level of policy only/ level of facts only). hypothesis 11. A hypothesis is a tentative, (tested/untested) principle. hypothesispasses the testbecomes economic theory [If the hypothesis passes the test, it becomes economic theory.] positive statement 12. A positive statement is concerned with (what is/what ought to be). They collect and present facts. normative statement 13. A normative statement is based upon (facts/value judgments). These statements are concerned with what the economy should be like or which policies are best. 14. An example of a normative statement would be (It is too disagreements among economists 16. Most of the disagreements among economists involve (positive/normative) statements as regards economic (policy/facts). Microeconomics 17. Microeconomics is concerned with (specific economic units/the entire economy). macroeconomics 18. Which of the following is associated with macroeconomics ? (an examination of the incomes of Richland Duck graduates/ unemployment in the civilian labor force). microeconomic statement 19. Which of the following is a microeconomic statement ? (GDP decreased by 1% last year/Auto prices declined this year). Full employment conflicts 20. Full employment conflicts with the economic goal of (economic growth/price stability). Full employment is complementary 21. Full employment is complementary with the goal of (economic security/ price stability). NS 11-21

63 NS 22-23 Bias 22. Bias – preconceptions that (are/are not) based on facts. Loaded terminology 23. Loaded terminology – (emotional/non-emotional) terms leading to a nonobjective analysis. Definitions 24. Definitions – economic words have different meanings. Examples: Utility A. Utility means (extra/satisfaction) Investment B. Investment means (money/tools, machinery, & factories) Price floors price ceilings C. Price floors are (above/below) price ceilings

64 fallacy of composition 25. The fallacy of composition states that what is true for the (individual/group) must necessarily be true for the (individual/group). Cowboys won the Super Bowl stock market should 26. The Cowboys won the Super Bowl so the stock market should rise rise is an example of the (post hoc/correlation v. causation) fallacy. Cause & effectafter this, because of this fallacy 27. [Cause & effect] The after this, because of this fallacy states that because event A precedes event B, ___ is necessarily the cause of ___. If you leave a football game at the end of the 3 rd quarter, you will avoid 28. If you leave a football game at the end of the 3 rd quarter, you will avoid traffic & get home more quickly.Therefore, everyone should leave the traffic & get home more quickly. Therefore, everyone should leave the game early. game early. This is an example of the (post hoc fallacy/fallacy of composition). post hoc fallacy 29. A n example of the post hoc fallacy is (I turned the game on & the Mavs lead but lost the game/My grade in econ has improved because Ive studied more.) NS 25-29 Ill lean over & maybe I can see better. A B

65 inversely 30. Which graph shows the amount of Y inversely related to the amount of X? ____ 31. In which graph above is the amount of Y (constant at $10) unrelated unrelated to the increasing amount of X? ___ directly 32.In which graph above is the amount of Y directly related to the amount of X? ___ Zero slope Infinite slope Zero slope and an Infinite slopeC B A Direct InverseInverse A B C D

66 The End


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