1 - 1 Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show The Nature and Method of Economics 1 C H A P T E R

1 - 2 Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show The Economics Perspective Consider... MARGINAL ANALYSIS Marginal Benefits & Marginal Costs SCARCITY & CHOICE RATIONAL BEHAVIOR UTILITY

1 - 3 Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show WHY STUDY ECONOMICS plus many modern contributors... Adam Smith David Ricardo John Stuart Mill Karl Marx John Maynard Keynes Economics for Citizenship Professional & Personal Applications

1 - 4 Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show ECONOMIC METHODOLOGY Scientific Method Hypothesis Testing Theory Law Principles Models

1 - 5 Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show Theories Facts Policy Economics Theoretical Economics ECONOMIC METHODOLOGY

1 - 6 Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show Analytical Economics Terminology Generalizations ECONOMIC METHODOLOGY

1 - 7 Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show Analytical Economics Terminology Generalizations Other-Things-Equal ceteris paribus ECONOMIC METHODOLOGY

1 - 8 Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show Analytical Economics Terminology Generalizations Other-Things-Equal ceteris paribus Abstractions ECONOMIC METHODOLOGY

1 - 9 Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show Analytical Economics Terminology Generalizations Other-Things-Equal ceteris paribus Abstractions Graphical Expression ECONOMIC METHODOLOGY

Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show ECONOMIC POLICY STATE THE GOAL POLICY OPTIONS IMPLEMENT & EVALUATE

Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show What are our goals and objectives? ECONOMIC GOALS

Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show TRADEOFFSTRADEOFFS Economic Growth Full Employment Economic Efficiency Price-Level Stability Economic Freedom Equitable Distribution Economic Security Balance of Trade ECONOMIC GOALS

Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show MACROECONOMICS...

Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show MICROECONOMICS... MACROECONOMICS...

Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show Positive Economics Absolute Facts Normative Economics What Ought to be MICROECONOMICS... MACROECONOMICS...

Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show Biases Loaded Terminology Definitions Fallacy of Composition Causation Fallacies Post Hoc Fallacy Correlation vs. Causation PITFALLS TO SOUND REASONING

economics economic perspective utility marginal analysis scientific method theoretical economics principles generalizations other-things-equal assumption policy economics tradeoffs macroeconomics aggregate microeconomics positive economics normative economics fallacy of composition “after this, therefore because of this” fallacy ENDBACK Copyright McGraw-Hill/Irwin, Inc. 2005

Copyright McGraw-Hill/Irwin, 2005 The Economics Perspective Why Study Economics Economic Methodology Macroeconomics and Microeconomics Pitfalls to Sound Reasoning Key Terms Previous Slide Next Slide End Show THE ECONOMIZING PROBLEM CHAPTER 2 COMING SOON