Chapter 1 Economics Defined

A more concise One-Page Test Review of Chapter 1 may help with exams.  Updated 9/8/17


I. Basic Terms  3 Videos  
II. Economic Models
1 Video   
II. United States Economic Goals 
1 Video

IV. Economic Disciplines  4 Videos 
V. Why Economist Disagree Video  
VI. Sundry Materials 
2 Videos

Math Review short math review of basic dynamic for economics from R. L. Reynolds, Boise State
Macro Review video 11 min is for those taking a comprehensive exam.
Textbook Supplements

 I. Basic Terms
   A. Economy is the social science concerned with the use of scarce resources
           like land and labor to fulfill unlimited human.
. Resources are the inputs, want satisfaction is the output 
C. Key Concepts for understanding and analysis
   1. Scarcity of resources results in the need for choices by participants.
         2. Purposeful behavior by
participants (buyers and sellers) is exhibited
             to enhance their own rational self interest. See
Economics in the dock 6 min video
         3. Marginal analysis where the change in benefit received is balanced with
             the change in cost is a common purposeful behavior.
         4. Fallacy of composition: applying to the whole that which is true for a part
             without adequate proof. 1 and 3 are odd numbers, so four is odd number.
This fallacy is the basis of police profiling. See
              Why Do People Continue to Believe Stupid Economic Ideas - Mark Blyth 5 min video
Fallacy of division:
This is the assumption that if something is true for the
             whole then it must be true for its parts. The absolutely worst abuse here
              involves inferring from an average that all elements are average.
         6. Post hoc fallacy: Assumption that correlation proves causation.  
             This is related to the concept in law of circumstantial evidence.
         7. Cum Hoc Fallacy :simultaneous correlations while post hoc refers
             to sequential correlations.
Logical fallacyis a pattern of reasoning rendered invalid by a flaw in its logical structure
                that can neatly be expressed in a standard
logic system
    D. Economic methodology 
         1. Positive economics 
             a. What something is 
             b. Objective, can be measured
             c. Example: measuring disposable personal income which is an 
                 individual's salary after taxes
             d. A Theorem on the Methodology of  Positive Economics
         2. Normative economics
             a. What something ought to be 
             b. Subjective, difficult to measure 
             c. Requires value judgments by citizens, Political Action Committees (PAC's),
                 politicians, economists, etc.
             d. Examples: should the minimum wage be increased, should defense spending
                 increase and social spending be lowered
         3. Descriptive economics
             a. Looking at the real-world to develop Economic Theory
             b. Economic Theory
                 1. Generalizations concerning economic behavior based upon real-world
                     observations, empirical by nature
                 2. Economic theories are objective "positive economics"
                 3. Assumes behavior is rational and economic (self-serving)
                 4. Example: as the price of a product increases, consumers tend to buy less
             c. Economic Policy
                 1. Application of economic theory to solve economic problems
                 2. Economic policies are subjective, "normative economics".
                 3. How society makes economic choices such as in the 1980's when
                     a. spending for the elderly (Social Security) increased 
                     b. spending for children (Head Start) decreased 1234

Unit I. Review Economics, Resources, Scarcity, Rational Self Interest, 
Marginal Analysis, Fallacy o
f Composition, Fallacy of Division, Post Hoc Fallacy, Cum Hoc Fallacy

Image result for Voodoo Economics cartoons


Politics or Political Economy is a battle between Positive Economics and Normative economics which ends with economic policy. Opinions on political economy questions like those depicted here and by
2016 Election Issues in One-Page.

Image result for Voodoo Economics cartoons


   II. Economic Models
A. Definition
1. Simplified generalizations to represent of real-world economic activity
           2. Requires Ceteris Paribus: Latin for holding other economic variables constant
Ceteris Paribus Trap
       B. Designing Models
           1. Models may be quantities or qualitative
           2. Economic Models 3 minute video
3. Three Pitfalls to model analysis 
a. Restrictive, unrealistic assumptions 
b. Omitted details  
c. Are economic models falsifiable?
4. Model representations are not always correct
               a. Are economic models falsifiable?
b. Pfleiderer on The Misuse of Economic Models 1 hour podcast

               c. Models such as the Production Possibility Curve chapter 2 and supply
                   and demand, chapter 3, explained in the next chapter provide a simplified
                   description of how some aspect of an economy works.
d. Beware of economic textbooks

Unit II. Review Simplified generalizations represents real-world economic activity
 requiring Ceteris Paribus or holding other economic variables constant

 III. United States Economic Goals
A. Employment Act of 1946 set goals in response to a
           Soviet 5-year economic plans.
      B. Humphrey Hawkins Act of 1978 added goals.
          1. Economic growth
          2. Full employment of all economic resources
          3. Price stability (low inflation)
          4. Positive balance of payments (international flow of dollars)
          5. Economic freedom
          6. Equitable distribution of income
          7. Economic security (if you have A through F, you have G)
     C. 2016 Economic Report of the President gives the President's annual
          view on our achieving these goals. Video 1 hr. 27 min. on 2014 report

Unit III. Review Economic growth, Full employment of all economic resources,
Price stability (reasonable inflation), Positive balance of payments, Economic freedom,
Equitable distribution of income Economic security

IV. Important Economic Disciplines


Other Stuff
Economics Video Lectures,
History of Capitalism Videos from Cornell X

One-Page Chapter Review
Macro Test Review 1 Macro Test Review 2,  Macro Test Review 3, Micro Test Review 1Micro Test Review 2,   Micro Test Review 3

Justice Brandies' Gilded Age Observation

Louis D. Brandeis quote: We can have democracy in this country, or we can have great...

Is becoming a  predominant 21st Century belief?

Economic Policies have improved TV's, made them a necessity, even on a phone. Is your watch next?

As a kid in the 1950's we didn't have a TV so I only saw one when I visited my cousin. Eventually my dad realized they wouldn't destroy education and we got a 12 inch set.

is the study of  total economic activity.

 is the study of individual segments
 of the economy.

Macro and Micro are 
Applied as Follows

Sources of Current Economic Information

Macro Activity Micro Activity Schools of Economic Thought
 and Methodology
2016 Economic Trends Cleveland FED
1. Inflation rate 1. A product's price Econometricians Articles, Videos
2. Economic growth 2. Pollution Behavioral Economists
Behavioral- Economics 3 min
Behavioral Economics? 4 min
Regional Economist and Economic Synopses
FRED down load FED data St. Louis FED
3. Total employment 3. Poverty International Economics Library of Economic Liberty Much Stuff
4. The  business cycle 4. A competitive market Labor Economics Center for Economic and Policy Research
ACDC Introduction to Macro 1:38 Video  What is Microeconomics 1:54 Video Public Economics U.S. Political Economy one-page on varied topics
1  Wiki explanation is extensive, for now, the first few paragraphs are sufficient.

2 Wiki explanation is extensive, for now, the first paragraph is sufficient.

Financial Economics much free stuff


Unit 4 Review Macroeconomics: Employment, Growth, Inflation, Cycles, Microeconomics: A products price, pollution, poverty, market types,

V. Why Economist Disagree? 1 hour 8 minutes video

VI. Sundry Materials    
      A. Economics Glossary from Amosweb 

  B. Video Review9.08 Video
   C. Outside Reading
          1. Success and Failure of Social Systems
    2. Is economics a science?
3. Economics is more like history than physics
4. Hopium economics
5. Can Economics Be Ethical?
The History of Economics 9 minute Video Adam Smith, David Ricardo,
           John Stuart Mill, William Stanley Jevons, Alfred Marshall and
           Lord John Maynard Keynes are considered. 

E. The Assent of Money: A Financial History of World 4 hour Video
Economists Do It With Models is an interesting blog
Quick History of Economics
      H. Building America's Democratic Federalist Republic
          1. The Early Colonial Period
           2. Determining Political Power and "We the People"
3. Increasing We" of "We the People"

           4. Thomas Jefferson Leader of the Opposition

           5. Constitutional History of Our Democratic Federalist Republic
           6. Capitalistic Democracy

              7. One page review of the basics of Our Democratic Federalist Capitalist Republic for more see
              Characteristics of Market System Capitalism and Political Economy





Chapter 1 Class  Discussion Questions

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Chapter 1 Homework Questions

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