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Transcript
A. P. Economics (APE) Seating Chart APE: The Course Course Objectives Learn vs. Achieve 3 Choices The Choices One Teach to the test!!!! Two Think like an economist!!!! Three Reach for the stars!!!! Do Both. This is the correct answer. The A. P. Economics Test 2 separate Tests Microeconomics & Macroeconomics Scores (0-5) One Semester of college credit each May 17th, 2012 Course Focus Real world Application of material to current events Opening Q’s Test Preparation Problem sets Graphing Grading What is economics? How to allocate limited resources with unlimited wants and desires. Choices Incentives Costs vs. benefits Areas of study Microeconomics Demand Supply Price equilibrium Market structures Sources of capital Macroeconomics Monetary policy Fiscal policy Government International Trade Performance Challenges Grading Participation Tests Homework Group work Current events/Readings Investment portfolio Honours paper Depends on completed assignments within grading period Expectations Participate Adults Meet deadlines Have fun! Do well! A Brief History of Economics The development of different schools of thought Early Influences British Maritime Trade Edmund Burke, British Parliament “Some of the chief principles of commerce; such as the advantage of free intercourse between all parts of the same kingdom...the evils attending restriction and monopoly...and that the gain of others is not necessarily our loss, but on the contrary an advantage by causing a greater demand for such wares as we have for sale” Alexander Hamilton, First U.S. Treasury Secretary “A national debt, if it is not excessive, will be to us a national blessing.” Adam Smith Wealth of Nations (1776) Invisible Hand Laissez faire Growth of wealth Anti-government Fueled by growth of labor pool Smith leads to Birth of …. Economics Capitalism Classical School of Economic Thought Classical & Neoclassical Economics Continued Development (neo) Alfred Marshall Math Supply & Demand Positive or Good Influences Market Trade Negative or Bad Influences Government/taxes Trade restrictions Many Unknowns Industrial Revolution Renowned for Communist Manifesto Karl Marx (1848) Politics based on economic analysis Labor & wealthy fighting over profits Increase in wealth at expense of workers Capitalism as unstable Socialism Downfall Of Neoclassical Economics John Maynard Keynes Intellectual Challenged Treaty of Versailles Gold Standard Keynesian School of Thought The General Theory of Employment, Interest & Money (1936) Business Cycle Government needed to guide capitalism Father of modern economics & “mixed economy.” Sammuelson 1948 Textbook Bretton Woods 1944 Allied Conference Creates Modern Financial System World Bank IMF Keynesian Economics WW II - 70’s Monetary & Fiscal Policy Government can help Great Society Downfall Of Keynesian Economics New Classical / Monetarism Milton Friedman - Creator of “Chicago School” Expectations Anti-Keynesian Monetary Supply Growth equal to Economic Growth Government is the problem Efficient Market Hypothesis Assumptions: Efficiency The markets immediately incorporates all information Rationality People act in a rational manner at all times Risk Since the market knows all, the only risk is how closely does an investment follow the market Beta Efficient Market Hypothesis Conclusions: Econometrics Mathematical Models Laissez-faire Economists enter the Boardroom & Wall Street Moderation Belief that proper Monetary Policy can override the business cycle (& Keynesians too!) Greenspan New Classical Econometrics Monetary Policy Anti-inflation Sustained Growth Laissez-Faire Underlying assumptions problematic Downfall Of the New Classical School New Keynesian Addresses problems from New Classical Irrational Behavior Long-term vs. Short-term Market Inefficiencies Sticky Prices The Ongoing Debate Saltwater vs. Fresh Water Additional Readings Paul Krugman, Princeton University “How did Economists get it so wrong?” (NY Times 9/6/09) Gregory Mankiw, Harvard University “The Macroeconomist as Scientist & Engineer” (May 2006) John Cassidy, New Yorker Magazine After the Blow-up: Laissez-faire Economists do some soul-searching & finger-pointing. (1/11/10)