Economics

Question 1

Economics

Answer 1

studies, describes, models, and makes projections about flow of wealth in production, distribution, and consumption of resources

Question 2

The 3 major economic theories

Answer 2

Economic Liberalism
Economic Nationalism
Marxism

Question 3

Economics is trying to understand

Answer 3

how we use the resources we have at our disposal and how we produce, distribute, and consume products made from these resources; transactions and exchange, and it therefore has underlying assumptions

Question 4

Economics assumes

Answer 4

All societies transform labor into goods and engage in exchange

Question 5

The main argument of liberalism

Answer 5

individual actors are more rational in their uses of resources than are groups or governments

Question 6

What does liberalism favor with the government?

Answer 6

It favors markets with minimum government intervention and it builds on the “economic person” assumption

Question 7

What is the rational individual?

Answer 7

The economic person is rational and sees to maximize utility to gratify needs and wants. Utility is the measure of possible well-being

Question 8

What are the four assumptions of the rational individual?

Answer 8

Humans have unlimited desires
Humans have limited/scarce resources
Humans evaluate costs and benefits of actions
Humans are self-interested

Question 9

Scarcity

Answer 9

Humans’ unlimited wants generate demand

Scarcity means that there are insufficient resources to fill demand

Question 10

Opportunity Costs

Answer 10

value of demands not being met (the value of the next best alternative given up in an economic decision)

Question 11

The Law of Demand

Answer 11

the inverse relationship between the price of goods and the quantity demanded of that good

Question 12

The Law of Supply

Answer 12

the direct relationship that exists between the price of a good and the quantity supplied of the good

Question 13

What do we assume about equilibrium and why is this fallacious?

Answer 13

Theoretically, we assume that equilibrium occurs in the market, although we never precisely know when an equilibrium emerges and how long it may hold for a particular good

Question 14

Neoliberalism

Answer 14

This is a subset of economic liberalism and it is an ideology that proscribes a public policy model that strongly favors the value of free market competition

Question 15

The two assumptions of neoliberalism

Answer 15

economism and marketism

Question 16

economism

Answer 16

All social processes are functions of economies, even globalization

Question 17

marketism

Answer 17

Free and open markets work best

Question 18

The 3 strategies to increase competition and the economic theory

Answer 18

neoliberalism

privatization, liberalization, and deregulation

Question 19

privatization

Answer 19

public sector control transferred to private sector control

Question 20

liberalization

Answer 20

removal of restrictions on movements of goods, services, money, and capital

Question 21

deregulation

Answer 21

reduction of government authority to intervene in the market

Question 22

Economic Nationalism

Answer 22

Set of economic policies by a state to create, favor, and protect domestic markets to strengthen and enrich the state
this includes labor, industry, consumption, and capital formation, with special emphasis on domestic industry

Question 23

Mercantilism

Answer 23

another name for EN

Question 24

The five foundations of economic nationalism

Answer 24

1. primacy of the state,
2. wealth as a means to power,
3. power as a means to wealth and military power,
4. Wealth and power are the ultimate ends of national policy.
5. Occasional sacrifices might be necessary for military security

Question 25

Primacy of the State

Answer 25

the economy is the underlying factor that enhances the capacity of the state. Economic activities must be subordinate to state building and state interests

Question 26

The 5 Goals of Economic Nationalism

Answer 26

1. Primacy Objective: The supremacy of the state and the state-guided economic policy is directed towards industrialization, which should provide everything the state and nation need 2. Industry has externalities throughout the economy and for overall development 3. Possession of industry coincides with economic self-sufficiency and autonomy 4. Industry is the basis to modern military power 5. Economic nationalism assumes that military power and domestic welfare are complementary.

Question 27

The 3 main policies of economic nationalism

Answer 27

1. The market tends to concentrate wealth and establish dependency between the strong and weak 2. Mercantilism to generate favored trade 3. Protectionism

Question 28

Which economic theory is preferred in the short and long run?

Answer 28

nationalism, and liberalism

Question 29

Marxism

Answer 29

(historical materialism): this takes a very different approach than economic liberalism or nationalism, examining human societies, especially changes in societies

Question 30

Main unit of marxist analysis

Answer 30

Historical materialism examines relations of production, or the interactions of the various social classes

Question 31

The four essential elements of marxism

Answer 31

1. dialectical approach to knowledge and society 2. materialist approach to history 3. destiny of capitalist development 4. normative commitment to socialism

Question 32

Dialectical approach to knowledge

Answer 32

change is constant due to the inherent struggle of working our contradictions inherent in society and politics

Question 33

Materialist approach to history

Answer 33

Productive forces and economic activities are central to change and function through class struggle

Question 34

Destiny of Capitalist Development

Answer 34

Production is economic laws of motion of modern society

Question 35

The Three inevitable economic laws

Answer 35

disproportionality, concentration of capital, falling profit

Question 36

The Law of Disproportionality

Answer 36

disproportionality between production and consumption causes depressions and fluctuations. The increasing severity of the disproportions and subsequent depressions and fluctuations will lead to revolution. The system will not be able to maintain production-consumption equilibrium, as the majority will not be able to purchase basic goods, creating gluts and shortages.

Question 37

The law of concentration of capital

Answer 37

increasing concentration of wealth to the few and impoverishment of many

Question 38

Law of Falling profit

Answer 38

As capital accumulates and becomes more abundant, the rate of return declines, thereby decreasing incentive to invest. This leads to economic stagnation and unemployment. This is partially caused by the law of disproportionality, as large portions of the population will not be able to purchase available goods

Question 39

The Bourgeoisie

Answer 39

The owners of the means of production, or the resources necessary to conduct business. They use the means of production to accumulate capital without contributing to production

Question 40

The Proletariat

Answer 40

The laborers who only have their labor to sell and it rarely receives its true value. They produce work that becomes the basis for capital

Question 41

How is society relates to Bourgeois power?

Answer 41

Society is organized and commanded by the Bourgeoisie to legitimize and protect their ownership, and in doing so, the Bourgeoisie will exploit laborers, even denying their basic human rights. The Bourgeoisie have heavy influence on the state and its institutions

Question 42

What is the result of the three economic laws and Bourgeoise power?

Answer 42

the Proletariat would overthrow the Bourgeoisie and work towards a more egalitarian society in socialism and communism