the world of economics

Question 1

Microeconomics

Answer 1

the study of the behavior of individual households, firms, and governments; the choices they make; and their interaction in specific markets

Question 2

Macroeconomics

Answer 2

The study of the behavior of the overall economy.

Question 3

Positive economics

Answer 3

Explains how the economy works. How it is.

Question 4

Normative economics

Answer 4

The practice of recommending policies to solve economic problems. What we should do about it.

Question 5

differing values

Answer 5

even if same positive views, different views exist.

ex) left: increase government intervention
right: levitate government intervention

Question 6

The methods of economics

Answer 6

using models. abstract representation of reality

Question 7

Model

Answer 7

abstract representation of reality. simple as possible to accomplish its purpose

Question 8

2 assumptions made by economic models

Answer 8

simplifying assumptions and critical assumptions

Question 9

simplifying assumption

Answer 9

any assumption that makes a model simpler without affecting any of its important conclusions

Question 10

critical assumption

Answer 10

any assumption that affects the conclusions of a model in an important way.

ex) “all of the roads are open” –> wrong critical assumptions may lead to wrong conclusions.

Question 11

shift vs movement along line

Answer 11

movement along line impacted by change in independent variable

shift of line –> if any other independent variable changes. iow any variable that actually affects Y but not measured on either axis on graph