Micro & Macroeconomics

1. Micro& Macroeconomics

Micro&
Macroeconomics
Mirco- Macroeconomics
Gregory Mankiw

2.

3.

N. Gregory Mankiw is the
Robert M. Beren Professor of
Economics at Harvard
University. As a student, he
studied economics at Princeton
University and MIT. As a
teacher, he has taught
macroeconomics,
microeconomics, statistics, and
principles of economics.

4. Course instructor

2015- 2016; Humboldt University (Germany), Erasmus
Mundus scholarship for postdoctoral research, Central Asian
Research center, Berlin, Germany
2014- 2015, Harvard University(USA), Visiting Scholar at the
Department of Economics by Invitation of Gregory Mankiw,
chair; Cambridge, USA
2006 –2012 Robert Gordon University /PhD Program in
International Business, Aberdeen Business School, Title of
PhD thesis: An investigation of Foreign Trade Policy and its
impact on Economic Growth: the case of Kazakhstan(19912008)
1997 – 1999 Post-Graduate School at the Moscow University
of Economics, Statistics & Informatics;
Candidate of Economic Sciences (Thesis was defended at the
Moscow State University of Economics, Statistics &
Informatics) Title of thesis: The methodology and analysis of
statistical evaluation of National Wealth of the Republic of
Kazakhstan on the base of National Economic Accounting.

5. Schedule

Academic period 19.12- 25.02
Mid term 16.01-21.01
End term 20.02-25.02
Exams 27.02-11.03

6. Ten Principles of Economics

Chapter 1

7. Economy. . .

. . . The word economy comes from a
Greek word for “one who manages a
household.”

8. Society and Scarce Resources:

The management of society’s
resources is important because
resources are scarce.
Scarcity implies choice and choice
implies cost.

9. Society and Scarce Resources:

The management of society’s
resources is important because
resources are scarce.
Scarcity implies choice and choice
implies cost.

10. Economics

Economics is the study of how
society manages its scarce
resources.

11. Economists study. . .

How people make decisions.
How people interact with each other.
The forces and trends that affect the
economy as a whole.

12. Ten Principles of Economics

How People Make Decisions
1. People face tradeoffs.
2. The cost of something is what you give
up to get it.
3. Rational people think at the margin.
4. People respond to incentives.

13. Ten Principles of Economics

How People Interact
5. Trade can make everyone better off.
6. Markets are usually a good way to
organize economic activity.
7. Governments can sometimes improve
economic outcomes.

14. Ten Principles of Economics

How the Economy as a Whole Works
8. The standard of living depends on a
country’s production.
9. Prices rise when the government prints
too much money.
10. Society faces a short-run tradeoff
between inflation and unemployment.

15. Thinking Like an Economist

Chapter 2

16. Economics trains you to. . . .

Be mindful about the choices that you
make.
Evaluate the cost of individual and social
choices.
Examine and understand how certain
events and issues are related.
But there is the issue of terminology, some
math, and GRAPHS, GRAPHS AND SOME
MORE GRAPHS!

17. The Economist as a Scientist

The economic way of thinking . . .
Involves thinking analytically and objectively.
Makes use of the scientific method.
Involves the use of abstract models to focus the
discussion on a main idea or theme in the complexity
of the real world.
To apply the scientific method in economics, assumptions
are used to make the world easier to understand.
Ceteris Paribus Assumption-All else equal.
Role Play Scenario-Purchasing something at a store.

18. Economic Models

Economists use models to simplify reality
in order to improve our understanding of the
world.
As simplifications of reality, models need
assumptions.
A Model of Boids Flying
Models start small and then grow in
increasing complexity.
Play Bolero by Maurice Ravel

19. Graphing Data

A graph reveals a causal
relationship between two
variables.
The vertical line is the y-axis.
• Independent variable.
The horizontal line is the xaxis.
• Dependent variable.
How do we show a negative
and a positive relationship
between variables?

20. Two Simple Rules for Movements vs. Shifts

Rule One
When an independent variable changes and
that variable does not appear on the graph,
the curve on the graph will shift.
Rule Two
When an independent variable changes and
does appear on the graph, a movement along
the existing curve will occur. The curve will
not shift.

21. Graphing Data

Economists use three types of graphs to
reveal relationships between variables. They
are:
Time-series graphs
Cross-section graphs
Scatter diagrams

22. Two of the Most Basic Economic Models Are

The Circular Flow Diagram
The Production Possibilities Frontier.

23. The Circular-Flow Diagram

Revenue
Goods &
Services sold
Market for
Goods
and Services
Firms
Inputs for
production
Wages, rent,
and interest
Spending
Goods &
Services
bought
Households
Market for
Factors
of Production
Labor, land,
and capital
Income

24. Journal Assignment-Circular Flow Diagram

Journal AssignmentCircular Flow Diagram
Draw a circular flow diagram.
Identify the parts of the model that correspond
to the flow of goods and services and the flow of
dollars for each of the following activities:
Sam pays a storekeeper $1 for a quart of milk.
Sam gets a quart of milk.
Sally earns $4.50 per hour working at a fast food
restaurant.
Sally works at the restaurant.

25. The Production Possibilities Frontier

•Shows the various combinations of two
goods that can be produced by one firm.
•Assumes two goods
•Assumes fixed technology and fixed
factors of production.

26. The Production Possibilities Frontier

Quantity of
Computers
Produced
D
3,000
C
2,200
2,000
1,000
0
A
B
300
600 700
1,000
Quantity of
Cars Produced

27. The Production Possibilities Frontier

Quantity of
Computers
Produced
D
3,000
C
2,200
2,000
1,000
0
A
Production
possibilities
frontier
B
300
600 700
1,000
Quantity of
Cars Produced

28. Concepts Illustrated by the Production Possibilities Frontier

Efficiency
Tradeoffs
Opportunity Cost
Economic Growth

29. The Production Possibilities Frontier

Quantity
of Computers
Produced
The Production
Possibilities Frontier
4,000
An outward shift
in the production
possibilities
frontier
3,000
2,100
2,000
0
E
A
700
750
Increase in
technology to
produce
computers.
1,000
Quantity of
Cars Produced

30. Microeconomics and Macroeconomics

Microeconomics focuses on the individual
parts of the economy.
How households and firms make decisions
and how they interact in specific markets
Macroeconomics looks at the economy as
a whole.
How the markets, as a whole, interact at the
national level.

31. The Essence of Microeconomics-Buyers and Sellers

32. The Many Facets of Macroeconomics

33. Two Roles of Economists

When they are trying to explain the
world, they are scientists.
When they are trying to change the
world, they are policymakers.

34. Positive versus Normative Analysis

Positive statements are statements
that describe the world as it is.
Called descriptive analysis
Normative statements are statements
about how the world should be.
Called prescriptive analysis

35. Why Economists Agree and Disagree

We agree on the methodology, but
not on the underlying
assumptions underlying
incentives and behavior.
Example-No Child Left Behind
and Test Scores.

36.

Thank you