* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download econimic is the social science
Survey
Document related concepts
Production for use wikipedia , lookup
Economic planning wikipedia , lookup
Greg Mankiw wikipedia , lookup
Fiscal multiplier wikipedia , lookup
Economic democracy wikipedia , lookup
Participatory economics wikipedia , lookup
Nouriel Roubini wikipedia , lookup
Edmund Phelps wikipedia , lookup
Economics of fascism wikipedia , lookup
Non-monetary economy wikipedia , lookup
American School (economics) wikipedia , lookup
Transformation in economics wikipedia , lookup
Steady-state economy wikipedia , lookup
Transcript
Professor Ashgan Abou Gabal 1. What Economics is all about? (Concepts & Definitions) 2. micro and macroeconomics 3. positive versus normative 5. Economics as an Art 6. Significance/Advantages of Economics Political economy was the earlier name for the subject, but th economists in the late 19 century suggested "economics" as a shorter term for “Economic Science“ At the turn of the 21st century, the expanding domain of economics in the social sciences has been described as Economic Imperialism There are a variety of modern definitions of economics. Some of the differences may reflect evolving - views of the subject or - different views among economists.[12] Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The field of economics is traditionally divided into two broad subfields Microeconomics Macroeconomics Microeconomics study the decisions of individual study the decisions of households and firms Macroeconomics study the operation of the economy as a whole which is just the sum of the activities of all these decision-makers - the changes over time in the economy’s rate of unemployment - alternative policies to raise growth in national living standards . Microeconomics Micro comes from Greek word mikros, meaning “small” focuses on the individual parts of the economy (such as households and firms or as buyers and sellers) . How households and firms make decisions and how they interact in specific markets Macroeconomics : Macro: comes from Greek word, makros, meaning “large” looks at the economy as a whole. Economy-wide phenomena, analyzes the entire economy and issues affecting it, including unemployment, inflation, economic growth, and monetary and fiscal policy. The study of the national economy and the global economy as a whole. Focuses on big picture and ignores fine details Microeconomics vs.andMacroeconomics Examples of microeconomic macroeconomic concerns Microeconomics Macroeconomics Production Prices Income Employment Production/Output in Individual Industries and Businesses Price of Individual Goods and Services Distribution of Income and Wealth How much steel How many offices How many cars Price of medical care Price of gasoline Food prices Apartment rents Wages in the auto industry Minimum wages Executive salaries Poverty Employment by Individual Businesses & Industries Jobs in the steel industry Number of employees in a firm National Production/Output Aggregate Price Level National Income Total wages and salaries Employment and Unemployment in the Economy Total Industrial Output Gross Domestic Product Growth of Output Consumer prices Producer Prices Rate of Inflation Total corporate profits Total number of jobs Unemployment rate economic theory rational applied economics behavioral economics positive economics normative economics (describing "what is") (advocating "what ought to be"); mainstream economics heterodox economics" (dealing with the "rationalityindividualismequilibrium nexus"); (more "radical" and dealing with the "institutions-historysocial structure nexus").[3] When economists are trying to explain the world, they are scientists. When economists are trying to change the world, they are policy advisor. for example, Why, is unemployment higher for teenagers than for older workers? Sometimes economists are asked to recommend policies to improve economic outcomes. What, for instance, should the government do to improve the economic well-being of teenagers? When economists are trying to explain the world, they are scientists. When they are trying to help improve it, they are policy advisers. Because scientists and policy advisers have different goals, they use language in different ways. For example, suppose that two people are discussing minimum-wage laws. Here are two statements you might hear: POLLY: Minimum-wage laws cause unemployment. NORMA: The government should raise the minimum wage. SO WHAT IS THE DIFFERENCE POLLY Polly is speaking like a scientist She is making a claim about how the world works Positive statements NORMA Norma is speaking like a policy adviser She is making a claim about how she would like to change the world. Normative statements Prescriptive Descriptive how the world ought how the world is about to be An economist might evaluate Polly’s statement by analyzing data on changes in minimum wages and changes in unemployment over time. . Norma’s statement cannot be judged using data alone. Deciding what is good or bad policy is not merely a matter of science. It also involves our views on ethics, religion, and political philosophy. Positive Science (What is? What was? What will be?) – actual happenings Examples of Positive statements - India is an over-populated country. - Prices in Indian economy are constantly rising Normative Science (What ought to be? What ought to have been?) Examples : - Fundamental principle of economic development should be the development of rural India - Agricultural income should also be taxed Study of how economy works Statements about how the economy works are positive statements, whether they are true or not Accuracy of positive statements can be tested by looking at the facts(and just the facts) Lieberman & Hall; Introduction to Economics, 2005 19 Study of what should be Statements that suggest what we should do about economic facts, are normative statements Normative statements cannot be proved or disproved by the facts alone Used to make value judgments, identify problems, and prescribe solutions Lieberman & Hall; Introduction to Economics, 2005 20 Example Ahmed- minimum wage laws cause unemployment Mustafa- the govt. should raise the minimum wage. Difference between positive and normative statement Positive: can test their validity Normative: value judgment Positive or Normative Statements? ? An increase in the minimum wage will cause a ? decrease in employment among the least-skilled. POSITIVE Higher federal budget deficits will cause interest rates to increase. POSITIVE ? Positive or Normative Statements? ? The income gains from a higher minimum wage are worth more than any slight reductions in employment. NORMATIVE State governments should be allowed to collect from tobacco companies the costs of treating smoking-related illnesses among the poor. NORMATIVE ? ? Give an example of a positive statement and an example of a normative statement. Some government agencies that collect economic data and make economic policy: Department of Commerce ▪ http://www.commerce.gov Bureau of Labor Statistics ▪ http://www.bls.gov Congressional Budget Office ▪ http://www.cbo.gov Federal Reserve Board ▪ http://www.federalreserve.gov Give an example of some government agencies that collect economic data and make economic policy in Dubai Name three parts of government that regularly rely on advice from economists. Why do economists so often appear to give conflicting advice to policymakers? There are two basic reasons: Economists may disagree about the validity of alternative positive theories about how the world works. Economists may have different values and, therefore, different normative views about what policy should try to accomplish. Much of economics just tries to explain how the economy works. Yet often the goal of economics is to improve how the economy works. When you hear economists making normative statements, you know they have crossed the line from scientist to policy adviser. Suppose that Peter and Paul both take the same amount of water from the town well. To pay for maintaining the well, the town taxes its residents. Peter has income of $50,000 and is taxed $5,000, or 10 % Paul has income of $10,000 and is taxed $2,000, or 20 % Is this policy fair? If not, who pays too much and who pays too little? Does it matter whether Paul’s low income is due to a medical disability or to his decision to pursue a career in acting? Does it matter whether Peter’s high income is due to a large inheritance or to his willingness to work long hours at a dreary job? These are difficult questions on which people are likely to disagree. If the town hired two experts to study how the town should tax its residents to pay for the well, we would not be surprised if they offered conflicting advice. Science is a theoretical aspect whereas Art is a practical aspect. In economics we study consumption, production, public finance etc, which provide practical solutions to our daily economic problems. Study of cause and effect of inflation or deflation falls Science within the purview of but framing appropriate and suitable monetary and fiscal policies to control inflation and deflation is an Art. Theoretical Advantages - Increase in Knowledge - Developing Analytical Attitude Practical Advantages Significance for the consumers Significance for producers Significance for workers Significance for politicians Significance for academicians Significance for administrators Effective man-power planning Helpful in fixing price Solving distribution problems - ECONOMIC GROWTH FULL EMPLOYMENT ECONOMIC EFFICIENCY PRICE LEVEL STABILITY Economic Freedom EQUITABLE DISTRIBUTION OF INCOME ECONOMIC SECURITY BALANCE OF TRADE To understand the world better You’ll begin to understand the cause of many of the things that affect your life To gain self-confidence You’ll lose that feeling that mysterious, inexplicable forces are shaping your life for you Lieberman & Hall; Introduction to Economics, 2005 33 To achieve social change You’ll gain tools to understand origins of social problems and design more effective solutions To help prepare for other careers You’ll discover that a wide range of careers deal with economic issues on many levels To become an economist You’ll begin to develop a body of knowledge that could lead you to become an economist in the future Lieberman & Hall; Introduction to Economics, 2005 34