Thinking Like an Economist

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Thinking Like an Economist by Mind Map: Thinking Like an Economist

1. Microeconomics and Macroeconomics

1.1. Microeconomics

1.1.1. Decision making

1.1.2. Behavior

1.1.3. Households and firms

2. Macroeconomics

2.1. Inflation

2.2. Unemployment

2.3. Economic Growth

3. Observe that economies differ across countries and that they changer over time.


4.1. Methods of Science

4.1.1. Observation, Theory, and More Observation Observation Provide both the motivation for developing theories and the data for testing them Theory Formulate to explain data Collect Data On prices, quantity of goods, incomes, price level, unemployment and many other variables

4.1.2. Assumptions Simplify the complex world and make it easier to understand

4.2. Two simple models

4.2.1. Production Possibility Frontier (PFF) Scarcity Efficiency Inefficiency Tradeoff Opportunity cost Economic growth

4.2.2. Circular-flow diagram


5.1. Positive and Normative Statements

5.1.1. A key difference between positive and normative

5.1.2. Positive Statements Claims that attempt to describe the world as it is Why do people use money? No value judgements

5.1.3. Normative Statements Claims that attempt to prescribe how the world should be Should people use money? Value judgements


6.1. Conflict

6.1.1. Differences in scientific judgements

6.1.2. Differences in values

6.2. Policy makers may ignore economist's advice