Economics in one easy lesson

1. Economics in one easy lesson With apologies to Greg Mankiw and Henry Hazlitt And thanks to Yoram Bauman http://www.youtube.com/watch?v=VVp8UGjECt4

2. People face trade offs The cost of something is what you have to give up to get it Rational people think at the margin People respond to incentives Trade can make everyone better off Markets are usually a good way to organize economic activity Governments can sometimes improve market outcomes A country’s standard of living depends upon its ability to produce goods and services Prices rise when the government prints too much money Society faces a trade off between inflation and unemployment 10 Principles of Economics according to Greg Mankiw

3. Microeconomics vs. Macroeconomics • The key differences:

4. Microeconomics vs. Macroeconomics • The key differences: • Microeconomists are generally wrong about specific things.

5. Microeconomics vs. Macroeconomics • The key differences: • Microeconomists are generally wrong about specific things. • Macroeconomists tend to be wrong in general.

6. Microeconomics vs. Macroeconomics • The key differences: • Microeconomists are generally wrong about specific things • Macroeconomists tend to be wrong in general • Macroeconomists have correctly predicted 9 out of the last 5 recessions.

7. Microeconomics vs. Macroeconomics • The key differences: • Microeconomists are generally wrong about specific things • Macroeconomists tend to be wrong in general • Macroeconomists have correctly predicted 9 out of the last 5 recessions. • Macroeconomics was developed to make weathermen look good.

8. People face trade offs The cost of something is what you have to give up to get it Rational people think at the margin People respond to incentives Trade can make everyone better off Markets are usually a good way to organize economic activity Governments can sometimes improve market outcomes A country’s standard of living depends upon its ability to produce goods and services Prices rise when the government prints too much money Society faces a trade off between inflation and unemployment Microeconomics vs. Macroeconomics

9. People face trade offs The cost of something is what you have to give up to get it Rational people think at the margin People respond to incentives Trade can make everyone better off Markets are usually a good way to organize economic activity Governments can sometimes improve market outcomes A country’s standard of living depends upon its ability to produce goods and services Prices rise when the government prints too much money Society faces a trade off between inflation and unemployment Microeconomics vs. Macroeconomics

10. People face trade offs The cost of something is what you have to give up to get it Rational people think at the margin People respond to incentives Trade can make everyone better off Markets are usually a good way to organize economic activity Governments can sometimes improve market outcomes A country’s standard of living depends upon its ability to produce goods and services Prices rise when the government prints too much money Society faces a trade off between inflation and unemployment Microeconomics vs. Macroeconomics

11. People face trade offs The cost of something is what you have to give up to get it Rational people think at the margin People respond to incentives Trade can make everyone better off Markets are usually a good way to organize economic activity Governments can sometimes improve market outcomes A country’s standard of living depends upon its ability to produce goods and services True most of the time Prices rise when the government prints too much money Society faces a trade off between inflation and unemployment Microeconomics vs. Macroeconomics

13. People face trade offs The cost of something is what you have to give up to get it Rational people think at the margin People respond to incentives Trade can make everyone better off Markets are usually a good way to organize economic activity Governments can sometimes improve market outcomes A country’s standard of living depends upon its ability to produce goods and services Prices rise when the government prints too much money True by definition Society faces a trade off between inflation and unemployment Microeconomics vs. Macroeconomics

14. MV Ξ PQ

15. People face trade offs The cost of something is what you have to give up to get it Rational people think at the margin People respond to incentives Trade can make everyone better off Markets are usually a good way to organize economic activity Governments can sometimes improve market outcomes A country’s standard of living depends upon its ability to produce goods and services Prices rise when the government prints too much money 10. Society faces a trade off between inflation and unemployment Total Crap Microeconomics vs. Macroeconomics

16. People face trade offs The cost of something is what you have to give up to get it Rational people think at the margin People respond to incentives Trade can make everyone better off Markets are usually a good way to organize economic activity Governments can sometimes improve market outcomes Blah Blah Blah Blah Blah Blah 10. Blah Blah Blah 10 Principles of Economics

17. 10 Principles of Economics • People face trade offs

18. 10 Principles of Economics • People face trade offs Having to make choices sucks

19. 10 Principles of Economics • People face trade offs 2. The cost of something is what you have to give up to get it

20. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it Having to make choices really sucks

21. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it • Rational people think at the margin

22. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it • Rational people think at the margin People are stupid

23. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it • Rational people think at the margin • People respond to incentives

24. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it • Rational people think at the margin • People respond to incentives People aren’t that stupid

25. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it • Rational people think at the margin • People respond to incentives • Trade can make everyone better off

26. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it • Rational people think at the margin • People respond to incentives • Trade can make everyone better off Trade can also make everyone worse off, it depends upon the terms of trade.

27. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it • Rational people think at the margin • People respond to incentives • Trade can make everyone better off • Markets are usually a good way to organize economic activity

28. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it • Rational people think at the margin • People respond to incentives • Trade can make everyone better off • Markets are usually a good way to organize economic activity Governments are stupid

29. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it • Rational people think at the margin • People respond to incentives • Trade can make everyone better off • Markets are usually a good way to organize economic activity • Governments can sometimes improve market outcomes

30. 10 Principles of Economics • People face trade offs • The cost of something is what you have to give up to get it • Rational people think at the margin • People respond to incentives • Trade can make everyone better off • Markets are usually a good way to organize economic activity • Governments can sometimes improve market outcomes Governments aren’t that stupid

31. People face trade offs The cost of something is what you have to give up to get it Rational people think at the margin People respond to incentives Trade can make everyone better off Markets are usually a good way to organize economic activity Governments can sometimes improve market outcomes Blah Blah Blah Blah Blah Blah 10. Blah Blah Blah To summarize: 10 Principles of Economics