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I. Basic Terms
A. Economy is the social science
concerned with the use of
resources like land
and labor to fulfill human needs.
B.
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.
See
Margins
and Thinking at the Margin
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
5.
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.
8.
Logical fallacies
is
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
e.
Inflation Binary
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 spending
for the elderly (Social Security) increased
and spending for children
(Head Start) decreased 1234
4. Using Statistics
1. Why Do Economists Use Statistics?
2. Common Errors
interpreting Statistics
3.
Beginning with video 3 the series, statistics
are used in a questionable manner to analyze
to current economic issues of concern to Libertarians.
Unit I. Review
Economics, Resources, Scarcity, Rational
Self Interest,
Marginal Analysis,
Fallacy of Composition Fallacy of Division,
Post
Hoc Fallacy, Cum
Hoc Fallacy
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
See
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
11/30/14
e.
Why Do People Continue To Believe Stupid Economic Ideas? 4/17 Mark Blyth
g.
Economics Rules: the rights and wrongs of the dismal science
h.
Economists And Statistical Tests Are Bias
4/3/18
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.
Political Goals Differ
D. Economic Report of the President
Please
Share!
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
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Preface: Political Economy
American Capitalism is designed to
efficiently maximize total production while creating the profit required to pay
for perceived risk.
American Politics is designed to satisfy perceived needs
of the majority in accordance with the
US Constitution.
It evolves to meet majority needs while
protect minority rights with decisions compatible with American Capitalism.
Disputes go to the
Constitution Supreme.
Politics
or Political Economy
is
a battle between Positive Economics and Normative economics. The result is
economic policy. Opinions on political economy questions, like those depicted
here, are considered
at
2016 Election Issues in One-Page.
John Mueller's
1995 statement concerning
Retrospection Bias.
Theory Notes Only
1-2 pages per chapter
No Internet Links, Pictures
Macro
Ch 1-7
Ch 8 -13
Ch 14-18
Micro
Ch 19-22
Ch 23-29
Ch 30-33
Justice Brandies'
Gilded Age Observation
Is becoming a predominant 21st Century belief?
 As a kid in the early 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 his children's education so we got a 12 inch set.
Economics from
Norm Peterson of Cheers Economic
Policies have improved TV's, made them a necessity, even on your phone. Is your
watch next?
Other Stuff
Understanding Fake News
Wages Stagnation As Fake News
Economics Video Lectures,
History of Capitalism
Videos from Cornell
One-Page Chapter Review
Macro Test Review 1
Macro Test Review 2
Macro Test Review3
Micro Test Review 1
Micro
Test Review 2
Micro Test Review 3 |
