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Economics Lecture 1

Economics Lecture 1 . 2007 Economics Dept Mr Lim Peng Yeow. Ground Rules. PUNCTUALITY RESPECT CONSIDERATE Conducive environment for learning. Agenda Today. Introduction - What’s Economics? - Difference between Microeconomics & Macroeconomics - H1 & H2 syllabus & requirements

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Economics Lecture 1

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  1. Economics Lecture 1 2007 Economics Dept Mr Lim Peng Yeow

  2. Ground Rules • PUNCTUALITY • RESPECT • CONSIDERATE • Conducive environment for learning

  3. Agenda Today • Introduction - What’s Economics? - Difference between Microeconomics & Macroeconomics - H1 & H2 syllabus & requirements - Desired outcome • Basic Economic Problem - Scarcity • Economic Resources • Decision-making

  4. What is Economics? • It is a social science – part subjective (human behaviour) and part scientific (tools can predict fairly accurately the outcome). • It is a part of our lives; and we practise it without knowing it! • It is about decision-making!

  5. The Social vs Science aspects of Economics Economics is a social science study of human behaviour - how people make decisions / choices As opposed to physical sciences: analysing the behaviour of non-human phenomena e.g. electrons, atoms

  6. The social aspect of Economics Economics is a social science Study of human behaviour how people make decisions Why do we have to make decisions? Resources are limited. We cannot satisfy all our desires. The Central Problem of Economics - SCARCITY ??

  7. Economics as a science Economics is a social science Scientific method of inquiry Just like in Physics and Chemistry, Economics makes use of theories or modelsto help us explain actual events Interplay between theory and observation But instead of setting up laboratory experiments, economists formulate our theories based on past events, i.e. empirical data

  8. What is Economics? • Most of the challenging problems being confronted nationally and globally are economic in nature. • Examples like rise in GST, aid for the lower income group, economic growth or recession etc. • More examples like earthquake that affects a nation’s economic activity or even saving too much (paradox of thrift)!

  9. Decision-making? • How much taxes should be raised? Individuals @What should I spend my savings on this Christmas? @Should I have coffee or tea? Firms @How much bonus should I give to the workers? @Should I increase production?

  10. What is Economics? • When you study economics, you gain an understanding of the essential backdrop for current social and economic issues and debate; and the frameworks and methods that are used to analyze these issues. • The learning and skills you acquire will equip you for a wide range of jobs in the public and private sectors.

  11. Microeconomics? • Microeconomics is about decision-making by individuals and firms and how resources (land/raw materials, labour, capital & entrepreneurship) are priced and allocated efficiently through markets. • It is also about how the market mechanism (tool used to allocate) can fail and what should be done to rectify the problems encountered.

  12. Macroeconomics? • Macroeconomics looks at the big picture: income ($$) and growth (%), wealth ($$) and poverty, business cycles, inflation (%) and unemployment, interest rates, exchange rates, and the balance of trade and payments. • It examines the role for government intervention and the consequences of alternative policies that affects a certain country.

  13. Aims of H1 Syllabus • Concepts and principles covered should be applied to the real world context; • Where applicable, to the Singapore economy in Macroeconomics; • Emphasis on real world examples; • Application with opportunity to utilise problem-solving skills to address current issues. For Info Only

  14. H1 Syllabus Microeconomics • How the Microeconomy Works • Microeconomic Problems Macroeconomics • How the Macroeconomy Works • Economic Performance • Macroeconomy goals For Info Only

  15. Aims of H2 Syllabus • Concepts and principles covered should be applied to the real world context; • Where applicable, to Singapore, regional and international economies; • Emphasis on inter-connectedness of economic concepts using real world examples; For Info Only

  16. H2 Syllabus Market System • Scarcity, choice and Opportunity Cost • Resource allocation in competitive markets • Firms & How They Operate Market Failure & Government Intervention • Market Failure • Government Intervention in the Market For Info Only

  17. H2 Syllabus (con’t) National & International Economy • Key Economic Indicators • How the Macroeconomy Works • International Economics For Info Only

  18. To take H1 vs H2? Both H1 & H2 – 2 year coursework H1 content is half that of H2 For Info Only

  19. H1 Exam Requirement • Section A (70%) 2 hrs 15 mins • Case Study Questions • Candidates given 2 sets of condensed write-up on a multi-faceted economic issue or policy decision • Section B (30%) 45 mins • Essay Questions • Candidates are required to answer 1 out of 2 essay questions For Info Only

  20. H2 Exam Requirement • Paper 1 (40%) 2 hrs 15 mins • Case Study Questions • Candidates given 2 sets of condensed write-up on a multi-faceted economic issue or policy decision • Paper 2 (60%) 2 hrs 15 mins • Essay Questions 3 out of 6 • Section A (3 qns from Microeconomics) • Section B (3 qns from Macroeconomics) • Must at least answer 1 qn from each section For Info Only

  21. Desired Outcomes • An understanding of fundamental of economic principles, and the methods of inquiry used by an economist; • The ability to use the tools of economic reasoning to explain, analyse and resolve economic issues, and evaluate policy decisions;

  22. Desired Outcomes • The ability touse evidence in making rational arguments in economic context and understand one’s role in the economic system • Ability toread critically, from a variety of sources, to gain information about the changing economic activities and policies at the national and international levels

  23. Our Wish • Infusing real life experience & participative learning (fieldtrips, case studies) • Integrating IT into teaching & Nurturing independent learning (research, coursework) • Identify & tailor teaching & learning (pedagogies) • Showcase students’ talents & actualize leadership potential (Econs Website, peer teaching)

  24. References • Principles of Economics 3rd edn by N. Gregory Mankiw • Economics by John Sloman • Economics Today by Roger Leroy Miller

  25. References Resources TPJC Home Page - Online news http://www.tpjc.net/ TPJC Economics Dept Website http://economics.tpjc.net/

  26. Recall The central problem of Economics is SCARCITY! Economics studies • the art and science of decision-making Why is there a need to make decisions? • Because of resources (like land, minerals and machines) are limited  we cannot have everything that we desire  we have to choose & decide what we ultimately want

  27. What is Scarcity? • What is the economic problem facing all societies? • scarcity because human wants are unlimited and resources are limited. • How is society going to solve this problem? • choose among alternative goods and therefore society has to make sacrifices.

  28. What is Scarcity? • Scarcity is not: • Not a shortage • Not the same as poverty • A pervasive condition of human existence that exists because society has unlimited wants and needs, but limited resources used for their satisfaction.

  29. What are Economic Resources? • These are the inputs necessary for production to take place • Also known as factors of production • They are resources that are used to produce other products

  30. Types of Factors of Production Examples of FOPs: machines a plot of land computers workers iron ore saw LAND LABOUR CAPITAL the one who makes it all possible ENTREPRENEUR

  31. Who are the players? (Economic agents) Households / Individuals Businesses / Firms Government

  32. Economic agents: Households Some economic decisions that households have to make: Should I spend or should I save? Should I watch a movie or should I enjoy a meal at BK? Should I work or stay at home as a housewife? Should I work overtime? Households as buyers / consumers Households as workers

  33. Economic agents: Firms Some economic decisions that firms have to make: How much output should I produce? What price should I sell my goods? How many workers should I employ? Should I use more advanced equipment in my factory? How much raw materials should I order? Firms as producers Firms as buyersof factors of production

  34. Circular Flow HHs provide factor services to firms Money flow HHs pay firms for the g&s Households Firms firms pay HHs for their factor services Firms produce g&s to satisfy needs & wants Real flow

  35. Decision-making Question: • Why do we have to make decisions? • Why do we have to choose? Answer: Because we can’t have everything! Limited amount of money Limited amount of land Limited resources

  36. What Decisions to make? • What to produce? • How to produce? • For Whom to produce?

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