econ test 1 Flashcards
Economy
Sum total of work we must perform to produce goods and services for the general population
GDP
gross domestic product
sum value of all the goods and services produce in the economy
Real GDP
value of output adjusted for inflation
calculated by dividing gdp by inflation/deflation
Issues with GDP
high GDP doesn’t mean good
won’t measure if output is “good”
doesn’t account for non profit work
won’t consider distrabution of output
HDI
human development index
Human development index
Looks at
Income equality
Multidimensional and global inequalities
Multidimensional subjective well being
Sustainability
Capitalism
- Most production is done by private companies to generate profit (production for profit)
- Most work is done by people who work for someone else (wage labour)
Key factors capitalism
Competition
conflict
growth
inequality
cycles
innovation
Types of economies
Angelo saxon- most unequal and financialized
Continental- larger state, more regulation
Asian- state plays leading role in economic and industrial dev
Scandanavian- most equal, very large public sector
factors in economies
Work is the source of all value and surplus’
As we work technology develops to help us
Social relationships change with technology
Surplus must be divided (or taken)
Nothing in the economy is permanent (even the economy itself is bound to change)
Birth of Capitalism
The economics system we live in right now (capitalism) emerged in the 18th century in britain( and lightly across europe)
Emerged from more advanced and centralized feudal monarchies
Non agricultural production became the most influential sector in that society.
New ownership and control arose to reflect new technology
What caused Capitalism
Development of technology
Unified reliable markets (trading and buying became easier as trading centers (markets) were created
Resources (with more land people had more resources and more power)
Empire (slave labour and control of output and surplus’)
Government control
Neo Liberalism
Multi dimensional effort to restore business power
economic , political and cultural power
Response to problems of the golden age
-inflation
-falling profits
-worker militance
-national liberation
NEOLIBERALISM ISN’T SHRINKING THE STATE IT’S GIVING POWER TO AID BUISNESSES
Tools of neoliberalism
Use interest rates to regulate inflation and control labor markets
Privatize and deregulate more industries
Scale back social security programs (especially for working age adults)
Deregulate labour markets (including attack on unions)
Use free trade agreements to expand markets and constrain government interventions
Adam Smith
Wrote at dawn of capitalism
Analyzed society in terms of broad classes and historical change
Celebrated creativity and thrift aof the new class of capitalists
Identified division of labour as source of productivity in new industry
Believe\ed prices reflected labor values and that wages tended to subsistence
Leon Walras
Founded in 1870s in response to marxs critiques
Justified capitalism
Theory of general equilibrium in which all markets clear
Faith in self adjusting, welfare maximizing
