The Economics
Perspective
Why Study
Economics
Economic
Methodology
1
C HAPTE R
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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The Nature and
Method of
Economics
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Copyright McGraw-Hill/Irwin, 2005
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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Consider...
The Economics Perspective
• SCARCITY & CHOICE
• RATIONAL BEHAVIOR
• UTILITY
• MARGINAL ANALYSIS
Marginal Benefits &
Marginal Costs
Copyright McGraw-Hill/Irwin, 2005
WHY STUDY ECONOMICS
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
•Adam Smith
•David Ricardo
•John Stuart Mill
•Karl Marx
•John Maynard Keynes
plus many modern contributors...
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Economics for Citizenship
Professional & Personal Applications
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ECONOMIC METHODOLOGY
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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Scientific Method
Hypothesis Testing
Theory
Law
Principles
Models
Copyright McGraw-Hill/Irwin, 2005
ECONOMIC METHODOLOGY
The Economics
Perspective
Policy Economics
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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Theoretical Economics
Theories
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Facts
End
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ECONOMIC METHODOLOGY
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Analytical Economics
Terminology
Generalizations
Pitfalls to Sound
Reasoning
Key Terms
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End
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Copyright McGraw-Hill/Irwin, 2005
ECONOMIC METHODOLOGY
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
Previous
Slide
Analytical Economics
Terminology
Generalizations
Other-Things-Equal
ceteris paribus
Next
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End
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1-7
Copyright McGraw-Hill/Irwin, 2005
ECONOMIC METHODOLOGY
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
Previous
Slide
Next
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Analytical Economics
Terminology
Generalizations
Other-Things-Equal
ceteris paribus
Abstractions
End
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1-8
Copyright McGraw-Hill/Irwin, 2005
ECONOMIC METHODOLOGY
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
Previous
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End
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1-9
Next
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Analytical Economics
Terminology
Generalizations
Other-Things-Equal
ceteris paribus
Abstractions
Graphical Expression
Copyright McGraw-Hill/Irwin, 2005
ECONOMIC POLICY
The Economics
Perspective
Why Study
Economics
Economic
Methodology
STATE THE GOAL
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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POLICY OPTIONS
IMPLEMENT &
EVALUATE
Copyright McGraw-Hill/Irwin, 2005
ECONOMIC GOALS
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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What are our
goals and
objectives?
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ECONOMIC GOALS
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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•Economic Growth
•Full Employment
T
•Economic Efficiency R
A
•Price-Level Stability D
•Economic Freedom E
O
•Equitable Distribution F
F
•Economic Security
S
•Balance of Trade
Copyright McGraw-Hill/Irwin, 2005
The Economics
Perspective
MACROECONOMICS...
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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Copyright McGraw-Hill/Irwin, 2005
The Economics
Perspective
Why Study
Economics
Economic
Methodology
MACROECONOMICS...
MICROECONOMICS...
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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End
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Copyright McGraw-Hill/Irwin, 2005
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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End
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MACROECONOMICS...
MICROECONOMICS...
Positive Economics
Absolute Facts
Normative Economics
What Ought to be
Copyright McGraw-Hill/Irwin, 2005
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
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PITFALLS TO
SOUND REASONING
Biases
Loaded Terminology
Definitions
Fallacy of Composition
Causation Fallacies
Post Hoc Fallacy
Correlation vs. Causation
Copyright McGraw-Hill/Irwin, 2005
economics
economic perspective
utility
marginal analysis
scientific method
theoretical economics
principles
generalizations
other-things-equal
assumption
Copyright McGraw-Hill/Irwin, Inc. 2005
policy economics
tradeoffs
macroeconomics
aggregate
microeconomics
positive economics
normative economics
fallacy of composition
“after this, therefore
because of this” fallacy
BACK
END
CHAPTER 2
The Economics
Perspective
Why Study
Economics
Economic
Methodology
Macroeconomics
and
Microeconomics
Pitfalls to Sound
Reasoning
Key Terms
THE
ECONOMIZING
PROBLEM
COMING SOON
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Copyright McGraw-Hill/Irwin, 2005