lec 1 and 2 introduction to economics.ppt

8/20/2019 LEC 1 AND 2 INTRODUCTION TO ECONOMICS.ppt

1/18

THE CENTRALTHE CENTRAL

CONCEPTS OFCONCEPTS OF

ECONOMICSECONOMICS


2/18

WHY STUDY ECONOMICS?WHY STUDY ECONOMICS?

To make money.To under!and "o# $r%&e are

de!erm%ned %n a marke! run 'y (or&eo( demand and u$$)y.To &om$re"end "o# *o+ernmen! %

*o%n* !o ue na!%ona) reour&e on#"%&" $ro,e&!- !o 'ene(%! #"om.To under!and !"e under)y%n* &aue o(

e&onom%& %n,u!%&e %n a o&%e!y and !o

make one &on!r%'u!%on !o !ran(ormone &oun!ry %n!o a ,u!- $ro$er%n*and a !a')e !a!e.

Fundamentals of Economics 2


3/18

WHY IS IT IMPORTANT TOWHY IS IT IMPORTANT TO

UNDERSTAND ECONOMIC ISSUES?UNDERSTAND ECONOMIC ISSUES?

/e&aue !"ee are )%nked #%!" a)mo!a)) na!%ona) %ue.W%!"ou! y!ema!%& !udy o( e&onom%&-

%! % "ard (or anyone !o e+en !"%nk

a'ou! na!%ona) %ue.Head o( !a!e are (re0uen!)y re0u%red

!o make de&%%on !"a! %n+o)+e ue o(e&onom%&./u!- !"ey need no! 'e $ro(e%ona)

e&onom%!.More %m$or!an! % !"a! !"ey &an

%n!e))%*en!)y ue !"e o(!1&on()%&!%n*e&onom%& ad+%&e *%+en !o !"em.



4/18

EPOCH1MA2IN3 CONTRI/UTORS TOEPOCH1MA2IN3 CONTRI/UTORS TO

THEORY OF ECONOMICSTHEORY OF ECONOMICS


A d a m S m i t h

T h e W e

a l t h o f

N a t i o n s

( 1 7 7 6 )

F a t h e r o

f E c o n o

m i c s

K a r l M a r x

D a s K a

i t a l ( 1 ! 6 7 )

F a t h e r o

f

" o m m # n

i s m

$ o h n M K e

% n e s

& e n e r a l

T h e o r % o f

E m l o % m

e n t ( 1 '

6 )

F o # n d e

r o f

M a i n s

t r e a m E

c o


5/18

SPECIFIC DEFINITIONSSPECIFIC DEFINITIONS


It explores the behaviour of the financialmarkets, including interest rates, exchangerates and stock prices.

It studies business cycles – the fluctuationsin credit, unemployment and inflation – alongwith policies to moderate them.

It asks how government policies can be usedto pursue important goals, efficient use ofresources, full employment, price stability,and a fair distribution of income.


6/18

COMMON THEMECOMMON THEME

E&onom%& % 4!"e !udy o( "o#

o&%e!%e ue &ar&e reour&e!o $rodu&e +a)ua')e *ood ander+%&e and d%!r%'u!e !"emamon* d%((eren! %nd%+%dua)-5



7/18

UNI6ERSAL DEFINITIONSUNI6ERSAL DEFINITIONS


Economics is the study of those activitieswhich, with or without money, involveexchange transactions among people.

It is the study of wealth.

It is the study of using limited, scarceresources efficiently and effectively tosatisfy unlimited wants.

Economics is the study of how to improvesociety and make humane society possible.


8/18

SCARCITY AND EFFICIENCYSCARCITY AND EFFICIENCYT#o 2ey Con&ern 7 8S&ar&%!y 9 8E((%&%en&y

8Eden o( A(()uen&e 7 An An!%1!"e% o( S&ar&%!yS%n&e &ar&%!y $re+a%) e+ery#"ere- !"ere(ore-

reour&e ou*"! !o 'e ued 4e((%&%en!)y.5W"a! e((%&%en&y mean?

Con%der a o&%e!y (un&!%on%n* %ne((%&%en!)y:1◦ W"a! #ou)d 'e "a$$en%n* %n u&" a o&%e!y?

◦ Wou)d !"e *enera) $u')%& 'e!!er o(( or #oreo((?

E&onom%& e((%&%en&y re0u%re !"a! an e&onomy$rodu&e !"e "%*"e! &om'%na!%on o( 0uan!%!yand 0ua)%!y o( *ood and er+%&e.



9/18


MICROECONOMICSMICROECONOMICS

Adam Sm%!" ; 7 The Wealth ofNations◦ Fa!"er o( M%&roe&onom%&◦ M%&roe&onom%& % &on&erned #%!" !"e

'e"a+%our o( %nd%+%dua) en!%!%e u&" a

marke!- (%rm and "oue"o)d.◦ I! !ud%e "o# $r%&e are e!.◦ Ho# !"e $r%&e o( )and- )a'our and &a$%!a)

are de!erm%ned?◦

I! %n0u%re %n!o !"e !ren*!" and#eaknee o( !"e marke! me&"an%m.◦ Today- m%&roe&onom%& %n&)ude !"e !udy o(

mono$o)y- %n!erna!%ona) !rade- (%nan&e- e!&.


10/18


MACROECONOMICSMACROECONOMICS

@o"n 2 Maynard 2eyne ; 7 Theory ofEmployment, Interest and Money

◦ Fa!"er o( Ma&roe&onom%&

◦ 2eyne de+e)o$ed an ana)y% o( #"a! &aue

'u%ne &y&)e.◦ Ma&roe&onom%& eam%ne a #%de +ar%e!y o(

area- u&" a "o# !o!a) &onum$!%on and

%n+e!men! are de!erm%ned- "o# &en!ra) 'ank

mana*e money and %n!ere! ra!e- #"a! &aue%n!erna!%ona) (%nan&%a) &r%%- and #"y ome

na!%on *ro# ra$%d)y #"%)e o!"er !a*na!e.


11/18

METHODOLO3Y OF ECONOMICSMETHODOLO3Y OF ECONOMICS

E+eryone &)a%m !o kno# 4 something” a'ou!e&onom%&- #"%&" % 'o!" "e)$(u) andde&e$!%+e.

He)$(u)- 'e&aue mu&" kno#)ed*e &an 'e

!aken a *ran!ed.De&e$!%+e- 'e&aue %! % "uman !enden&y !oa&&e$! u$er(%&%a))y $)au%')e +%e#.

Mo! o( u !end !o ,ud*e an e&onom%& e+en!'y %! %mmed%a!e e((e&! on u.

An e&onom%! % %n!ere!ed %n !"e #ork%n* o(e&onom%& a a #"o)e ra!"er !"an %n !"e+%e#$o%n! o( any one *rou$.



12/18

METHODOLO3Y OF ECONOMICSMETHODOLO3Y OF ECONOMICS;T"eory + Pra&!%&e;T"eory + Pra&!%&e

T"e e&onom%& #or)d % mu&" &om$)%&a!ed.One &anno! $u! an e&onom%& !"eory %n!o

$ra&!%&e a ea%)y a %n na!ura) &%en&e:1

◦ E o( de!erm%n%n* !"e e((e&! o( a ne#med%&%ne.

◦ E o( de!erm%n%n* !"e e((e&! o( "or!a*eo( $e!ro) on %! $r%&e.

Ne+er!"e)e- one mu! !ry !o %o)a!e !"ee((e&! o( "or!a*e o( $e!ro) on %! $r%&e-4#%!" o!"er !"%n* 'e%n* e0ua).5



13/18

METHODOLO3Y OF ECONOMICSMETHODOLO3Y OF ECONOMICS;So&%a) + P"y%&a) S&%en&e;So&%a) + P"y%&a) S&%en&e

Can #e e$e&! e&onom%& !o 'e a

o',e&!%+e a $"y%&a) &%en&e?No %m$)e an#er./u! "a+%n* !o dea) #%!" "uman &arr%e an

ad+an!a*e o+er !"e na!ura) &%en!%!.

T"ey &an! ay: 4Su$$oe #e #ere HDOmo)e&u)e.5/u! )a+%" %m%!a!%on o( !"e $"y%&a)

&%en&e % a m%!ake.Ye!- !"ere % no u'!%!u!e !o (o&u on

em$%r%&a) e+%den&e and y!ema!%&reaon%n*.



14/18

ECONOMICS AS INTERDISCIPLINERYECONOMICS AS INTERDISCIPLINERY

SU/@ECTSU/@ECT

E&onom%& % no! an %nde$enden!d%&%$)%ne o( !udy %! % %n!erd%&%$)%nery%n !"eory and $ra&!%&e

S%n&e %! dea) #%!" !"e 'e"a+%our o("uman 'e%n*- !"ere(ore- %! a((e&! and*e! a((e&!ed 'y a)) o!"er o&%a) &%en&ed%&%$)%ne.◦ E&onom%& and So&%o)o*y.◦ E&onom%& and Py&"o)o*y.◦ E&onom%& and An!"ro$o)o*y.◦ E&onom%& and Po)%!%&.◦ E&onom%& and H%!ory.



15/18

RELATED TERMSRELATED TERMS

;E&onomy- E&onom%& and E&onom%&a);E&onomy- E&onom%& and E&onom%&a)

E&onomy re(er !o !"e e&onom%& e&!or o(a !a!e.A)!erna!%+e)y- %! a)o mean %ne$en%+e.

Parado o( a&"%e+%n* e&onomy a! !"e&o! o( 0ua)%!y- o',e&!%+e or a%m.E&onom%& and E&onom%&a)E&onom%& mean re)a!ed #%!" !"e

e&onomy o( a &oun!ry.E&onom%&a) mean %ne$en%+e #ay o(

do%n* !"%n*- &"ea$er- u%n* )e money

or reour&e- e!&.Fundamentals of Economics 15


16/18

THE WHOLE AND THE PARTTHE WHOLE AND THE PART


17/18

THE WHOLE AND THE PARTTHE WHOLE AND THE PART

. I! may $ay !"e US !o redu&e !"e !ar%((&"ar*ed on *ood %m$or!ed-e+en %( o!"er &oun!r%e re(ue !o )o#er !"e%r

!ar%(( 'arr%er.

G. I! may $ay a (%rm !o !ake on ome'u%ne a!

mu&" )e !"an (u)) &o!.

>. A!!em$! o( %nd%+%dua) !o a+e more %nde$re%on may

)een !"e !o!a) o( !"e &ommun%!y a+%n*.=. W"a! % $ruden! 'e"a+%our o( an

%nd%+%dua) may'e (o))y (or a na!%on.



18/18

UESTIONS?UESTIONS?

lec 1 and 2 introduction to economics.ppt

Documents