S1520 Principles of Economics for Non-Economists

This course is a guide to economic literacy. Economics is important in the everyday life of each and every person, but it can appear too complicated for a non-professional. Economists often have competing views on what will happen to the economy and give contradictory advice to the politicians. Economic journalists, especially writing for the general public, tend to oversimplify and mix up the terms, the issues and their own opinions, leaving the public even more confused. However, economics is not as mysterious and difficult as it might seem from an outsider point of view.
Economics is the social science of choices, whether that choice is made by an individual, a firm, a government or a planet. It is a science in that economists try to explain (and often rationalize) behavior by developing models and testable theories and engaging in hypotheses testing. Economics is a social science because, at the end of the day, interaction between economic agents – be they individuals, firms, governments – is a part of social reality, and it is this interaction that drives the most interesting and engaging questions.
Economic methodology and tools can be applied to a wide variety of topics ranging from consumer choice and a business's choice of optimal production levels to choices made by political parties in parliament and historical situations offering different choices. Economics can offer potential solutions to key global problems such as development and environmental degradation. Understanding of economic notions and economic methods also allows us to understand the limitations of economic reasoning and to raise additional questions in an informed manner.
Presentations during the course: additional readings will be suggested to students for short (about 15 minutes) presentations during the seminars. Topics for presentations will be listed at the beginning of the course, and additional readings will be suggested taking into account the specific preferences and interests of the students.``
Seminar participation: active participation is essential. Be ready to answer questions and discuss assigned readings as well as material used in the classroom and to provide feedback on other students’ presentations.
Homework: several written assignments will be given during the course to assist students' grasp of the main concepts and models discussed.
Mid-term exam: a multiple-choice test intended to monitor students' understanding and progress at the halfway point of the course.
Final paper: students will be offered a tentative list of topics for the final paper. Specific topics and literature will be discussed at the first seminars. Full guidelines will be provided at the beginning of the course. Expected length of the final paper is about 4000 words.
The final exam will consist of two parts: multiple-choice questions and several problems covering the material of the whole course.

Learning outcomes
By the end of this course, students should be able to:
• ask economists and policy makers incisive questions regarding the economy;
• articulate their own perspective on economic issues;
• explain what the ‘economic way of thinking’ means;
• understand what economists mean by rational behavior, equilibrium, and optimum;
• make a distinction between macroeconomic and microeconomic issues;
• understand the difference between normative and positive economic statements;
• explain when there may be a place for government intervention;
• apply the tools of economic analysis to non-economic issues;
• understand the growing interdependence of nations;
• offer explanations for economic crises.

Key topics
• Thinking like an economist
• Rational behavior of economic agents
• Modelling the market: demand and supply
• Competitive markets, monopolies and imperfect competition
• Game theory and strategic behavior
• Externalities and property rights
• Institutions
• Income distribution
• International trade
• Macroeconomic accounting – GDP, inflation, unemployment
• Money, prices and inflation
• Unemployment
• Basics of finance
• Economic fluctuations
• Basic macroeconomic models for closed and open economies
• Macroeconomics: schools of economic thought
• Crisis
• Environment and sustainability

Prerequisites
This course has no prerequisites. However, some basic mathematics, algebra, and graphing will be used.