Transitioning from microeconomics (ECON 211) to macroeconomics (ECON 212)
Jared Picou, one of my Econ 211 students this first summer term wrote with this question:
“…I have to take Econ 212 in the summer session B. Is it the same material just in a bigger scale? Or is it something completely
new? “
Think about it this way, instead of talking about the market for red apples or green apples, we can kind of combine our analysis combine these markets and just talk about the market for apples. Now do that everywhere, until eventually, you get a market for consumer goods, with cars, gasoline, apples, Popeyes chicken and George Foreman grills and about whatever you think of that families buy. Now also think about a market for investment goods that businesses will buy, and a market for government expenditures. Also, a market for labor (think about what we are talking about Friday with the demand for labor and will be talking about Monday with the supply of labor), and sometimes there will be unemployment in this market because it will not clear just right (wait for 212 for this). Also think about having a market for loanable funds and the price is the interest rate. Those will be the building blocks in 212. All of these markets fit together. You will get a look at unemployment in the labor market, how interest rates affect investment spending by businesses for investment goods, how this interest rate comes from the supply of money that banks and the Federal Reserve are able to affect the supply of, etc.
The faster money grows in the system (and this comes not from interest, but from what the banking system does, just as in the eary 1920s the Germans started printing money up like crazy) the faster prices go up and we have inflation. If inflation stops abruptly, as it did in the US in the 1980s, prices of goods stop going up in spite of the fact that we all though prices would continue to go up. Workers stopped seeing the rising pay offers that they had grown use to and people are reluctant to take jobs at what they think are low wages. As a result, unemployment goes up.
I hope this gives you an idea of what to expect next term. If you don’t mind, I might post this on the blog site (with or without your name–your call) so that the others will also know what to expect.
Dr. Turner, who I think will be teaching 212 next miniterm, is one of my partners in crime at the Bastiat’s Bastions blog–he is the sports economist of the bunch. He will read my post and correct anything or add to what I have written to further clarify things for you as far as what to expect.
Thanks for the question.
Do you want your name mentioned or would you prefer to be anonymous?
Morris Coats
June 30th, 2008 at 3:01 pm
MC’s preview sounds about right to me, but I’ll add just a couple of tidbits.
Not to put words in JC’s mouth, but when I am asked this or a similar question, I suspect students are often asking about the “apparatus” that will be used in Econ 212 class. That is, they are really asking how “hard” the class is, or what sort of “technical skills” they will need to be successful, or more pointedly, wondering if they’ll have to continue to shift around curves on a graph.
Much like Econ 211, Econ 212 is primary done by using graphical analysis (shifting around curves), a good amount of logical thinking, a pinch of algebra, and a bunch of definitions.
If you haven’t figured out the graphical analysis part (shifting around curves), you’ll find Econ 212 will be a struggle (just as Econ 211 must have been). If you are strong with graphical analysis, you’ll find portions of Econ 212 will likely come easily.
One difference I have noticed is that some (not all) students find Econ 212 a bit more abstract than Econ 211.
To borrow MC’s example, everyone understands what an apple is, and what the price of an apple is. In Econ 211, it is easy to wrap your brain around the idea that the price of apples has risen, and how this might impact (or not impact) your life. But as Dr. Coats suggested, in Econ 212, we will lump all goods produced into something called GDP, and the average level of overall prices into something called a price level. How does an increase in the price level impact your life? It does, but some students don’t find it as tangible.
However, do not fret! To combat this issue, we’ll spend a (painful?) amount of time in class helping you understand what goes into the definitions and calculations of macroeconomics variables. (GDP, price levels, unemployment rates, etc). It is not hard, nor very interesting, but you can’t understand Econ 212 without fully understanding these variables. If you are reading this (and you’ll get this speech in class), make an investment in understanding the macroeconomics variables. It will pay off.
If you get a strong grasp of the “language”, you’ll find Econ 212 to be largely “more of the same”.
Oh, and you will learn more than you care to about the Fed (not the Feds) and this guy named Ben Bernanke.
–CT (Dr. Turner)
July 11th, 2009 at 4:49 am
Dr. Coats and Dr. Turner’s analogy of 211 and 212 seems to be very clear, and as expected. While knowing that the study and understanding the mechanics and theories of economics is important, it has only been in recent years that I have actually found the study of economics to be “interesting.” As did I expect by the course descriptions (micro and macro) implications, we would be moving from studying the more elemental aspects to studying the more general aspects of economies as a whole. Dr. Coats has a way of putting thing in perspective while using layman’s terms. And, I don’t find the material particularly exciting; however, I do find it very interesting.
July 27th, 2009 at 11:36 am
Micro and Macro are one in a difference. Macroeconomics is on a much broader scale at analazing things. In Microeconomice we talked about Honda verses Toyota verses Ford. On the other hand, in Macroeconomics we would just discuss the demand for cars in general. Macroeconomics in my opinion require more analytical skills than Microeconomics. I dont quite find either of them interesting but I do see the diffence in them and how we can use them to make economic decesions. I also see how it can influence the decisions we make in different economies.
July 30th, 2009 at 1:36 pm
When it comes to trying to determine what is the difference between microeconomics and macroeconomics it is quite simple. Microeconomics deals with an individual decision making. Macroeconomics looks at the economy as a whole. Micro trys to determine how these decisions will effect supply and demand of goods. Macro looks at the economy; unemployment, interest rates, inflation, etc. It is hard for me to determine which one is better because they both determine two different things in our economy. In my opinion, I find micro to be easier to understand than macro.