Issue 52: Macroeconomics Introductions

Economics: social science concerned chiefly with the way society employs its limited resources, which have alternative uses, to produce goods and service for present and future consumption.
It is a Social Science--Deals with psychology, sociology, human interactions, economic interaction.
Resources: Anything that can be used to produce goods and services.
            -Human resources: Labor and skilled workers
            -Material resources: Machinery, Buildings, and Land.
Limited resources have alternative uses, they are called scarce. The existence of alternative uses for a resource implies it is scarce. Confronts us constantly. Time is a scarce resource.
Scarcity implies existence of alternative and thus choices be made among the alternatives.
Economic Systems: Choices that are made and the way in which they are made due to society's laws, customs, and practices.
--Capitalism
--Socialism

Macroeconomics: Concerned with the economy as a whole, or with large segments. Focuses on problems such as rate of unemployment, changing level of prices, and nation's total output of goods and services, and the ways in which the government raises and spend money.

Variables: A measure that can take on different values.

At one point in time, a hypothesis existed when there's no evidence to support it, a theory if there were some evidence and a law or principle when certain.
Now, these are used interchangeably.

A theory may be stated in a form of a model.
Model: representation of the essential features of a theory or of a real-world situation.
-may be expressed in the form of words, diagrams, tables of data, graphs, mathematical equation, or a combination.
A model is easier to manipulate than the reality it represents. It is a simplification of reality.

Fallacy of  False Cause or Post hoc fallacy: Cause and effect relationship "if-then" relationships are common.
If A occurs, then B occurs.
Therefore A caused B.

There are other reasons though.

B may occur by chance
B may be caused by factors other than A, or a common cause of both A and B
B may cause A

Fallacy of Composition: One reason that what is true of the parts of something is also necessarily true of the whole of it. Warns us that what is true of the parts is not necessarily true of the whole.

Fallacy of Division: One contends that something that is true of the whole is also necessariily true of its parts taken separately. Warns us that what is true of the whole is not necessarily true of the parts.