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Economics in one easy lesson With apologies to Greg Mankiw and Henry Hazlitt And thanks to Yoram Bauman

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Presentation on theme: "Economics in one easy lesson With apologies to Greg Mankiw and Henry Hazlitt And thanks to Yoram Bauman"— Presentation transcript:

1 Economics in one easy lesson With apologies to Greg Mankiw and Henry Hazlitt And thanks to Yoram Bauman

2 10 Principles of Economics according to Greg Mankiw 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes 8.A country’s standard of living depends upon its ability to produce goods and services 9.Prices rise when the government prints too much money 10.Society faces a trade off between inflation and unemployment

3 Microeconomics vs. Macroeconomics The key differences:

4 Microeconomics vs. Macroeconomics The key differences: Microeconomists are generally wrong about specific things.

5 Microeconomics vs. Macroeconomics The key differences: Microeconomists are generally wrong about specific things. Macroeconomists tend to be wrong in general.

6 Microeconomics vs. Macroeconomics The key differences: Microeconomists are generally wrong about specific things Macroeconomists tend to be wrong in general –Macroeconomists have correctly predicted 9 out of the last 5 recessions.

7 Microeconomics vs. Macroeconomics The key differences: Microeconomists are generally wrong about specific things Macroeconomists tend to be wrong in general –Macroeconomists have correctly predicted 9 out of the last 5 recessions. –Macroeconomics was developed to make weathermen look good.

8 Microeconomics vs. Macroeconomics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes 8.A country’s standard of living depends upon its ability to produce goods and services 9.Prices rise when the government prints too much money 10.Society faces a trade off between inflation and unemployment

9 Microeconomics vs. Macroeconomics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes 8.A country’s standard of living depends upon its ability to produce goods and services 9.Prices rise when the government prints too much money 10.Society faces a trade off between inflation and unemployment

10 Microeconomics vs. Macroeconomics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes 8.A country’s standard of living depends upon its ability to produce goods and services 9.Prices rise when the government prints too much money 10.Society faces a trade off between inflation and unemployment

11 Microeconomics vs. Macroeconomics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes 8.A country’s standard of living depends upon its ability to produce goods and services True most of the time 9.Prices rise when the government prints too much money 10.Society faces a trade off between inflation and unemployment

12

13 Microeconomics vs. Macroeconomics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes 8.A country’s standard of living depends upon its ability to produce goods and services 9.Prices rise when the government prints too much money True by definition 10.Society faces a trade off between inflation and unemployment

14 MV Ξ PQ

15 Microeconomics vs. Macroeconomics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes 8.A country’s standard of living depends upon its ability to produce goods and services 9.Prices rise when the government prints too much money 10.Society faces a trade off between inflation and unemployment Total Crap

16 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes 8.Blah Blah Blah 9.Blah Blah Blah 10. Blah Blah Blah

17 10 Principles of Economics 1.People face trade offs

18 10 Principles of Economics 1.People face trade offs Having to make choices sucks

19 10 Principles of Economics 1.People face trade offs 2. The cost of something is what you have to give up to get it

20 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it Having to make choices really sucks

21 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin

22 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin People are stupid

23 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives

24 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives People aren’t that stupid

25 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off

26 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off Trade can also make everyone worse off, it depends upon the terms of trade.

27 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity

28 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity Governments are stupid

29 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes

30 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes Governments aren’t that stupid

31 To summarize: 10 Principles of Economics 1.People face trade offs 2.The cost of something is what you have to give up to get it 3.Rational people think at the margin 4.People respond to incentives 5.Trade can make everyone better off 6.Markets are usually a good way to organize economic activity 7.Governments can sometimes improve market outcomes 8.Blah Blah Blah 9.Blah Blah Blah 10. Blah Blah Blah


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