Economics Flashcards
Economics definition
study or process of the exchange, production and consumption of wealth
What is an economic theory
Attempt to explain the exchange, production and consumption of wealth
What is the school of though?
A way of thinking of something
True or false: Economists from the same school of thought will think about economics a similar way
True
What are potenial problems with economic theories
- we are not 100% sure, and they could not be accurate
- HArd to model
- ## Unclear
What are neoclassical economics
economic chool of thought that connects supply and demand of a good to an individuals rationality and their ability to maximize utility
What is supply
How much of something
what is demand
how much people want an item
What happens to an item when the supply goes up?
THe price goes down
What happens to an item when the supply goes down
THe price goes up
What happens when the demand of an item goes down
The price goes down
What happens when the demand of an item goes up?
The price goes up
What are the assumptions of neoclassical economics
- People are driven by self interest
- people act rationally, independently and in a fully informed manner
- individuals maximize utility(getting the most out of something)
- companies maximize profit
- everything is the right price
What is equilibrium
Everything is the right price, the price your willing to pay
Statistic definition
Collect data, summerize and predict.
When do we use statistics
when making economic decisions
ARe we able to interperet statistics well?
not neccisarily
What are the two aspects of ideologies
Political and economic
What is the political part of ideologies
Deals with how much political freedom individuals have
What is the economic part of ideologies?
Deals with how much economic freedom individuals have
What is capitilism based on
neoclassocal economics
What are some believes of capitalism
- the only 2 things that operate in the market is supply and demand
- The governments only job is to enforce the rules of the game, everything else should be “free market”
- Competitions is a self regulating force in the market
What do high interest rates encourage poeple to do
save their money
What do low interest rates encourage people to do
take their money out of the bank and spend it
