Foundations of Economics Flashcards
What are the central themes?
distinction btw economic growth & economic development
threat to sustainability
extent of government intervention
extent of equality & efficiency
What is economic growth?
increase in output (goods/services, etc)
= economic growth
decrease in output
= negative economic growth
measured by GDP (Gross Domestic Product)
What is economic development?
increased living standards and well-being of people by:
increasing income & outputs
decreasing poverty
redistributing income (to minimise wage gap)
decreasing unemployment
What is the difference btw economic growth and economic development?
economic growth relates to the wealth of the country, however, economic development is concerned with taking care of the people
ECONOMIC DEVELOPMENT IS NOT AN AUTOMATIC RESULT OF ECONOMIC GROWTH
What is sustainable development?
development which meets the needs of the present without compromising the ability of future generations to meet their needs
Why is economics related to sustainability?
economic growth & development is achieved at expense of nature
Therefore, must raise awareness
What is government intervention?
when the government changes allocation of resources (output & income) from what markets working on their own would have achieved
What is efficiency?
the best use of resources to answer the what and how Qs
What is equity?
fair & just manner
NOT THE SAME AS EQUALITY (everyone gets the same)
briefly explain the efficiency & equity conflict to me
1) trade-off btw the two
2) gov intervention = decrease motivation
= decrease efficiency
= decrease savings & investments
= negative change in attitude
(theory by Arthur Okun)
1b) gov intervention = positive change in behaviour
= increase efficiency
and equitable
e.g. giving opportunity to those who may not have had it if not for the gov
