CHAPTER 1

WHAT IS ECONOMICS?

DISCUSSION QUESTIONS

2. Most students are familiar with the need to abstract from detail, and take notes only about the essential points. The student will want enough detail to be able to reconstruct the instructor’s argument, but not so much detail as to obscure the main point. It is unlikely that simply writing down the title of the lecture will enable the student to recall the main arguments at a later date. The choices of how much detail, and what particular detail, are similar to the choices an economist makes in thinking about a problem, that is to say, in constructing a model. [This is a good opportunity to discuss note-taking with the students. While most understand the basic idea, few are skilled at it. Take a look at a few students’ lecture notes, and ask whether you would be comfortable learning economics from those notes.]

3. Without theory, an economist (or anyone else) can only assemble facts, but she cannot understand the relationship between those facts, in particular the cause and-effect relationships. for example, a person who ignores theory can notice that average prices sometimes rise a short time after the country’s money supply increases, but has no way of knowing whether there is a causal relationship between those two phenomena, or whether they are just coincidences. A government policy maker who wants to change something in the country only has a few policy “tools” to use, and so she must have a theory to indicate to her whether changing one of those tools is likely to have the desired result in the country.

CHAPTER 1 APPENDIX

USING GRAPHS

TEST YOURSELF

2.   Slope is 0.

4.   K = (2,2); E = (2,1)

The “What do you conclude?” question is very vague.  Maybe ask “What do you conclude about the slopes of the lines on which K and E are located?”

MAIN PAGE              STUDYING MACRO ECONOMICS PAGE