What is theory of Karl Marx/ Adam Smith theory? What does Marxism/ Adam Smith’s theory, Keynesian school theory indicate?

-Adam smith believed that people who acted in their own self-interest produced goods and wealth that benefited all of society, government should not restrict or interfere in the markets because they could regulate themselves and, thereby, produce wealth at maximum efficiency. -Marxism states that capitalistic will eventually fail because owners exploit labour to generate wealth for themselves. It can lead to class conflict and social unrest. To ensure social and economic stability, labourers should own and control the means of production. -Keynesian school describes the role of government in capitalistic economy to promote economic stability. Government can regulate economy by economic policies such as the tax and government spending.

What are 3 types of economic system?

Free market economy, planned economy and mixed economy

What is a free market economy? a planned economy? mixed economy?

- A free market economy is an economic system in which economic relation are regulated by the law of supply and demand. In the market economy, business firms can compete freely and there is no direct government intervention, but the government will influence the economic situation through its fiscal and budgetary policies. - The planned economy is an economic system whereby the structure of the market is deliberately planned by the state, in which production and consumption quotas are fixed beforehand. In the planned economy, there is no real competition and the private ownership does not exist. - The mixed economy is an economic system in which some goods and services are produced by government and some by private enterprise. It lies between the markets economy and the planned economy.

Quoto is a fixed, limited amount or number that is officially allowed

How do companies compete in free market economy? Freely

Business firms can compete freely and there is no direct government intervention, but the government will influence the economic situation through its fiscal and budgetary policies.

What does trade- off mean?

Trade – offs mean when you want something you have to give up the others because of limited resources. Trade-offs (between/ with/ for): Exchanges involving the people’s choices to maximize their benefits.

What are some limits in microeconomics?

There are some limits in microeconomics: The limited income that consumers can spend on goods and services, the limited budgets and technical know - how that firms can use to produce things, the limited number of hours in a week that workers can allocate to labor or leisure

What does theory of consumer indicate?

Consumers theory describes how consumers, based on their preferences, maximize their well - being by trading off the purchase of more some goods with the purchase of less of others. We will also see how consumers decided how much their incomes to save thereby trading off current consumption for future consumption

Give some examples of trade- off among consumers

For example, consumers have limited income, they must trade-off between, saving or spending, buying now or in the future

Give some examples of trade- off among workers

For example, because the kinds of job - and corresponding pay scales - available to a worker depend in part on educational attainment and accumulated skills, one must trade off working now (and earn an immediate income) with continued education (and the hope of earning higher future income)

What does the theory of the firm indicate?

The theory of the firm indicates how the trade-off can be best made, how the firms decide to allocate resources such as technology, capital, production capacity,... to maximize profits

Give some examples of trade- off among firms

For example, a firm must decide whether to hiring additional workers or buying new machinery and to producing one set of production or another

What are 3 important themes of microeconomics?

They are limits, the role of price and central role of markets

Who makes decision on the price in planned economy? free market economy?

In a centrally planned economy, prices are set by the government. In a market economy, prices are determined by the interactions of consumers, workers and firms

What is the role of prices?

All of the trade-offs described above are based on the prices faced by consumers, workers and firms.

What is the goal of macroeconomics?

The goal of macroeconomics is to look at overall economic trends such as employment levels, economic growth, balance of payments, inflation and so on.

What do economic trends include?

Economic trends include employment levels, economic growth, balance of payments, inflation and so on.

What are 2 main policies of macroeconomics?

2 main policies of macroeconomics are monetary policy and fiscal policy

Who supervises fiscal/monetary policy?

Monetary policy which controls a nation's money supply is supervised by each country's Central Bank. Fiscal policy which controls a government's revenue and spending is in the hand of the Ministry of Finance

What are objectives of 2 macroeconomic policies?

The basic objectives of these two main macroeconomics policies are to promote economic growth and to keep inflation under control

What is GDP, GNP, inflation, Balance of payments, balance of trade, balance of trade deficit/ surplus? Grant? (p61)

- Gross domestic product (GDP) is the standard measure of the value added created through the production of goods and services in a country during a certain period. - Gross national product (GNP) is the total value of all the final goods and services made by a nation's economy in a specific time (usually a year). - Inflation is the rate of increase in prices over a given period of time. - The balance of payments (BOP) is the method countries use to monitor all international monetary transactions in a specific period. - The balance of trade deficit is a situation in which the value of goods a country imports (= buys from other countries) is greater than the value of goods it exports (= sells to other countries), or the size of this difference - The balance of trade surplus is a situation in which the value of goods a country exports (= sells to other countries) is greater than the value of goods it imports (= buys from other countries), or the size of this difference - Grant is an amount of money given, usually by a government or nonprofit organization, to fund certain projects

What are tools of fiscal policy?

The tools of fiscal policy are government spending and taxes

What does fiscal policy control? Monetary policy control?

Monetary policy controls a nation's money supply, Fiscal policy controls a government's revenue and spending

What are tools of monetary policy?

Interest rates (discount rate), open market operations, reserve requirements

Why is it said that micro and macroeconomics interdependent?

Because there are many overlapping issues between the two fields. For example, increased inflation (macro effect) would cause the price of raw materials to increase for companies and in turn affect the end product's price charged to the public

What is demand? What is quantity demanded?

Demand is/ refers to the quantity of goods and services buyers are willing and able to buy at various/ different prices Quantity demanded is the quantity of goods or services buyers are willing and able to buy at a certain price in a period of time

What is supply? What is quantity supplied?

Supply is/ refers to the quantity of goods and services sellers are willing and able to sell at various/ different prices Quantity supplied is the quantity of goods or services sellers are willing and able to sell at a certain price in a period of time

What are some shift factors of demand, supply?

- Shift factors of supply: Government plocies, technology, Price of input materials, future price expectations of the product,... - Shift factors of demand: other goods such as substitute goods, complement goods,...

What factors cause the demand/ supply curve to shift to the left/ to the right?

A demand curve shifts to the right when factors like increased income, positive changes in consumer taste, lower prices of complementary goods, or a growing population occur, while a shift to the left indicates the opposite; a supply curve shifts right with advancements in technology, lower production costs, or increased availability of resources, and shifts left with rising input costs, or natural disasters impacting production.

What happens to demand if society income increases?

When society's income increases, the demand for most goods and services also increases, meaning the demand curve shifts to the right, as people are able to purchase more goods at the same price level due to their higher purchasing power

What happens to supply if price of input increases? If there is an improvement in technology?

If the price of input increases, the supply of a good will decrease because it becomes more expensive to produce, leading to producers supplying less at any given price; whereas, if there is an improvement in technology, the supply will increase as it allows producers to produce more efficiently at a lower cost, resulting in a greater quantity supplied at each price level.

What is the law of demand? Law of supply?

- Law of demand: A change in the price of a good causes a change in Qd for that good when other factors are constant. If price of a good increases, Qd for that good will decrease - Law of supply: A change in the price of a good causes a change in Qs for that good when other factors are constant. If price of a good increases, Qd for that good will increase

When is the market in equilibrium? Excess demand? Excess supply?

A market is in equilibrium when the quantity demanded of a good or service is exactly equal to the quantity supplied, meaning there is no excess demand or excess supply; excess demand occurs when the quantity demanded is greater than the quantity supplied, while excess supply happens when the quantity supplied is greater than the quantity demanded.

How does price of a good affect quantity demanded, quantity supplied? (law of demand and supply)

According to the law of demand, when the price of a good increases, the quantity demanded decreases, and conversely, when the price decreases, the quantity demanded increases; while the law of supply states that when the price of a good increases, the quantity supplied also increases, and vice versa - meaning producers are generally willing to supply more of a good at a higher price.

What is public finance concerned with?

Public finance is the study of how governments raise and spend money, and how this affects the economy and society

What are trust funds? Federal funds?

Trust funds are legal arrangements that allow individuals to place assets in a special account to benefit another person or entity Federal funds are surplus reserves of money that banks deposit with the Federal Reserve. These funds can be lent out to other banks or financial institutions.

What is debt held by the public? debt held by federal accounts?

Debt held by the public is the amount of money the US government borrows from outside lenders to fund government activities. This debt is held by individuals, businesses, and foreign entities. Debt held by federal accounts is money that the federal government borrows from itself, or intragovernmental debt. It's not considered public debt.

What are main sources of government’s revenue?

The main sources of government revenue are taxes, sales of goods and services, and other non-tax sources.

What tax is federal fund from? Trust fund from? What is trust fund used for? what is federal funds used for?

Federal funds come from income taxes and payroll taxes, while trust funds come from payroll taxes. Federal funds are used for general government spending, while trust funds are used for specific programs like Social Security and Medicare.

What are 2 types of government’s debts?

Two types of government debt are internal debt and external debt.

A deficit is the amount by which something is less than what is required or expected

What is deficit spending?

Deficit spending is when a government spends more money than it receives in taxes over a period of time. It's also known as a budget deficit.

How does the government do to finance deficit?

Governments can finance deficits by borrowing money and printing money

When is deficit spending harmful/ helpful for the economy? Why?

Deficit spending can be helpful in the short term to stimulate the economy, but harmful in the long term.

TACN1 - Unit 1

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English

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University

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FLASHCARD QUESTION

Front

What is economics?

Back

Economics is the study of how people choose to use resources to satisfy well-being

FLASHCARD QUESTION

Front

What is well- being?

Back

Well-being means satisfaction people gain from the goods and services they choose to consume, from their time in leisure and with family as well as in jobs

FLASHCARD QUESTION

Front

What are resources?

Back

resources are anything people use to produce goods and services

FLASHCARD QUESTION

Front

What are two types/ branches of economics?

Back

Two branches of economics are microeconomics and macroeconomics:

+ Microeconomics focuses on the action of individuals and industries like the dynamics between buyers and sellers, lenders and borrowers

+ Macroeconomics takes a much broader view by analyzing the economic activity of entire country and international marketplace.

FLASHCARD QUESTION

Front

Why do people study economics? Or How can we benefit from studying economics?

Back

- knowledge to understand human thought and behavior

- help people and country become wealthy

FLASHCARD QUESTION

Front

What are means of production? What are factors of production?

Back

Things used to produce goods and services: machines, tools

Factors of production: machine, labor, finance, raw materials

FLASHCARD QUESTION

Front

What does economics study?

Back

Economics studies how individuals, businesses, and governments allocate scarce resources.

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