0-1 Introduction and Principles

Question 1

What is normative Economics?

Answer 1

• recommendation, required decision maker that requires rules

Question 2

What are positive Economics?

Answer 2

• description of situation

Question 3

What is the definition of Scarcity?

Answer 3

• society has limited resources and therefore cannot produce all goods and services people wish to have

Question 4

What is “The Economy”?

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2.

Answer 4

• all the production and exchange activities that tak place every day (buying, selling, …)
• local, national and international scale

Question 5

What are the essential Questions in Economics and what are the corrrespsonding two key words?

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2.
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4.
5.

Answer 5

• What goods and services should be produced?
• How much should be produced?
• How should it be produced using combinations of land, labor and capital?
• Who should get the services produced?
• Can the system adapt to change?
• Allocation and Distribution

Question 6

What are the definitions of Economic and Non-Economic activity?

Answer 6

• how much buying and selling goes in the economy over a certain period of time, especially in exchange for money
• (non-economic:) humand activities that are not performed for moneys worth, e.g. person going to temple

Question 7

What is the definition of Microeconomics?

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2.
3.

Answer 7

• the study of individuals, firms, government
• how decisions are made by individuals and firms and the consequences of those decisions
• weighing cost-benefit

Question 8

Planned Economic system

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3.

Answer 8

• economic axrtivity organized by central planners who decide answers to fundamental economic questions, such as motivation, public ownership
• not individual
• collective aims of people as a whole

Question 9

Capitalist Economic system

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2.

Answer 9

• incorporates principles of private ownership of factors of production to produce goods and services that are
  exchanged through a price mechanism
• production = primarily for profit

Question 10

What is the definition of Macroeconomics?

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2.
3.

Answer 10

• the study of the whole economcy
• examines aggregate behaviour of economy - how actions of all individuals and firms in economy interact to produce a particular level of economic performance as a whole
• e.g. overall prices in the economy