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1、N.GregoryMankiwMacroeconomicsPrinciplesofSixthEditionInthischapter,lookfortheanswerstothesequestions:Whatareeconomists’tworoles?Howdotheydiffer?Whataremodels?Howdoeconomistsusethem?WhataretheelementsoftheCircular-FlowDiagram?Whatconceptsdoesthediagramillustrate?HowistheProductionPossibilitiesFro
2、ntierrelatedtoopportunitycost?Whatotherconceptsdoesitillustrate?Whatisthedifferencebetweenmicroeconomicsandmacroeconomics?Betweenpositiveandnormative?TheEconomistasScientistEconomistsplaytworoles:1.Scientists:trytoexplaintheworld2.Policyadvisors:trytoimproveitInthefirst,economistsemploythescient
3、ificmethod,thedispassionatedevelopmentandtestingoftheoriesabouthowtheworldworks.Assumptions&ModelsAssumptionssimplifythecomplexworld,makeiteasiertounderstand.Example:Tostudyinternationaltrade,assumetwocountriesandtwogoods.Unrealistic,butsimpletolearnandgivesusefulinsightsabouttherealworld.Mod
4、el:ahighlysimplifiedrepresentationofamorecomplicatedreality.Economistsusemodelstostudyeconomicissues.SomeFamiliarModelsAroadmapSomeFamiliarModelsAmodelofhumananatomyfromhighschoolbiologyclassSomeFamiliarModelsAmodelairplaneSomeFamiliarModelsThemodelteethatthedentist’sofficeDon’tforgettofloss!
5、OurFirstModel:TheCircular-FlowDiagramTheCircular-FlowDiagram:avisualmodeloftheeconomy,showshowdollarsflowthroughmarketsamonghouseholdsandfirmsTwotypesof“actors”:householdsfirmsTwomarkets:themarketforgoodsandservicesthemarketfor“factorsofproduction”FactorsofProductionFactorsofproduction:theresourc
6、estheeconomyusestoproducegoods&services,includinglaborlandcapital(buildings&machinesusedinproduction)FIGURE1:TheCircular-FlowDiagramHouseholds:Ownthefactorsofproduction,sell/rentthemtofirmsforincomeBuyandconsumegoods&servicesHouseholdsFirmsFirms:Buy/hirefactorsofproduction,usethemtoproducegoods
7、andservicesSellgoods&servicesFIGURE1:TheCircular-FlowDiagramMarketsforFactorsofProductionHouseholdsFirmsIncomeWages,rent,profitFactorsofproductionLabor,land,capitalSpendingG&SboughtG&SsoldRevenueMarketsforGoods&Service