CAS EC 101 Lecture Notes - Lecture 2: Congressional Budget Office, Opportunity Cost, Rent Regulation

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Todd Idson

Document Summary

The study of how households and irms make decisions and how they interact in markets: macroeconomics. The study of economy-wide phenomena, including inlaion, unemployment, and economic growth. Scieniic method: dispassionate development and tesing of theories about how the world works, observaion, theory, more observaion. Conducing experiments in economics: is oten impracical. Subsitute for laboratory experiments: economists pay close atenion to the natural experiments ofered by history. Can simplify the complex world make it easier to understand. The art in scieniic thinking: deciding which assumpions to make: diferent assumpions. Economic models: diagrams and equaions, omit many details, allow us to see what"s truly important, built with assumpions, simplify reality to improve our understanding of it. Circular-flow diagram: visual model of the economy, shows how dollars low through markets among households and irms. This diagram is a schematic representation of the organization of the economy.