Macroeconomics Assignment Chapters 1 and 2
MacroEcon 1000 WW
Module 1 Assignment
6/10/2014
1. Economics provides a range of choices to decision makers regarding the outcomes or impacts of alternative courses of action. Describe the two types of economic analysis (see examples on the bottom of page three). Come up with three questions of your own as examples for each type of analysis, that relates to you or your community.
Positive Analysis = focuses on facts and statistics, cause and effect, theory development and inferences made from specific data, consequences of certain actions, etc. Answers the question ‘what is’ or ‘what will be’.
- If the government raises the tax on beer, will it lead to a fall in profits of the brewers?
- How will a reduction in income tax improve the incentives of the unemployed to find work?
-How would the inflation and unemployment rates be affected if the national debt jumped to 20 trillion tomorrow? Normative Analysis = Looks at what is ideal or desirable in the economy, based on judgment calls/opinions. Answers the question ‘what ought to be’. -Should the government increase taxes on alcohol?
-Should those unemployed (and not seeking work) for more than 12 months be able to acquire the benefits of unemployment?
-Should taxes on goods detrimental to people’s health (tobacco, alcohol, etc.) be increased in exchange for a decrease in other taxes (property, income, etc)?
2. Define in your own words and use examples to illustrate: a. Opportunity cost- when you make a decision, your opportunity cost is the next most valuable alternative, or the value of the next best option. What you sacrifice.
Example: if I wasn’t doing this macro assignment I would be watching Netflix. So I am sacrificing watching Netflix in order to do this assignment.
b. Ceteris paribus - describes the effect of one variable on another, if all other variables that may affect the second variable are constant. Latin translation: all other variables are fixed.
c. Marginal change-
Module 1 Assignment
6/10/2014
1. Economics provides a range of choices to decision makers regarding the outcomes or impacts of alternative courses of action. Describe the two types of economic analysis (see examples on the bottom of page three). Come up with three questions of your own as examples for each type of analysis, that relates to you or your community.
Positive Analysis = focuses on facts and statistics, cause and effect, theory development and inferences made from specific data, consequences of certain actions, etc. Answers the question ‘what is’ or ‘what will be’.
- If the government raises the tax on beer, will it lead to a fall in profits of the brewers?
- How will a reduction in income tax improve the incentives of the unemployed to find work?
-How would the inflation and unemployment rates be affected if the national debt jumped to 20 trillion tomorrow? Normative Analysis = Looks at what is ideal or desirable in the economy, based on judgment calls/opinions. Answers the question ‘what ought to be’. -Should the government increase taxes on alcohol?
-Should those unemployed (and not seeking work) for more than 12 months be able to acquire the benefits of unemployment?
-Should taxes on goods detrimental to people’s health (tobacco, alcohol, etc.) be increased in exchange for a decrease in other taxes (property, income, etc)?
2. Define in your own words and use examples to illustrate: a. Opportunity cost- when you make a decision, your opportunity cost is the next most valuable alternative, or the value of the next best option. What you sacrifice.
Example: if I wasn’t doing this macro assignment I would be watching Netflix. So I am sacrificing watching Netflix in order to do this assignment.
b. Ceteris paribus - describes the effect of one variable on another, if all other variables that may affect the second variable are constant. Latin translation: all other variables are fixed.
c. Marginal change-