1Preliminaries试卷.ppt

* A market economy is “decentralized,” meaning that there is no government committee that makes the decisions about what goods to produce and so forth. Instead, many households and firms make their own decisions: * Each of many households decides who to work for and what goods to buy. * Each of many firms decides whom to hire and what goods to produce. * In all versions of this textbook except Brief Principles of Macroeconomics, market efficiency and the invisible hand are covered more thoroughly in Chapter 7. * [“Govt” is an abbreviation for government. Throughout all of the Premium PowerPoint chapters, I try to use abbreviations the way a thoughtful instructor would use them if writing on a chalkboard. If you prefer to spell the word out, just use your mouse to highlight “govt” and then type out the full word.] Two examples of the idea in the second bullet point: A restaurant won’t serve meals if customers do not pay before they leave. A music company won’t produce CDs if too many people avoid paying by making illegal copies. Many fledging market economies are struggling through the transition from central planning because they have not developed institutions that protect and enforce property rights. The British news magazine The Economist has lots of current examples of this. An older but still interesting example comes from a column that Mankiw wrote in the June 12, 2000 issue of Fortune magazine entitled “Ukraine: How Not To Run An Economy.” The items in this list are meant to get students thinking about Principles 6 and 7 in the context of specific examples, and to generate discussion rather than arrive at definitive answers. NOTE: Discussing the entire list would consume a lot of class time (20-25 minutes). Two would suffice. Pick your favorite two and delete the others. Of course, you can skip this slide entirely if you wish to get through the chapter as quickly as possible. Here are some notes which might help guide the discussio