PRELIMS Flashcards
studies how individual, government, firms, and nations makes choices in allocating scarce resources to satisfy man’s unlimited wants.
ECONOMICS
division of economics which deals with overall performance of national and international economies.
MACROECONOMICS
macroeconomics problems
- income determination
- inflation
- employment
- monetary and fiscal policy
- international trade
economics about the behavior of the individual units of the economic system such as the consumer, producers, and households as resource owners.
MICROECONOMICS
microeconomics concern
- supply and demand
- consumer and producer
- market system and pricing
- individual wages
- competition
the reason why people need to study economics
SCARCITY
condition of resource insufficiency to satisfy all the needs and wants of a population
SCARCITY
the value of the best foregone alternative anything we give up to attain another.
OPPORTUNITY COST
basic inputs needed to produce goods and services.
FACTORS OF PRODUCTION
- all natural resources found in nature
- rent
LAND
- human resources used in production
- covers manual workers and professionals
- wage
LABOR
- man-made resources used in production
- machines, equipment, buildings, constructions
- interest
CAPITAL
- factor of production involved in combining different resources used to produce goods
- setting of a business and of assuming risks to make profit
ENTREPRENEURSHIP
3 economic questions
- what to produce?
- how to produce?
- for whom to produce?
- analyzes the cause-effect and interrelationship among factors and events
- rates, national income, employment
POSITIVE ECONOMICS
- study of what should be; dispersing investment business toward the countryside to reduce rural poverty
NORMATIVE ECONOMICS
the sum of all factor payments from raw material to the final product stage
GNP
economic growth
GDP:
- 6.8% (2012)
- 7.2% (2013)
- 5.7 (2014)
- 6.8% (2018)
- based on traditions and practices
- primitive and backward civilization
TRADITIONAL
authoritative system; decision making is centralized in the government
COMMAND
- most democratic
- supply and demand
MARKET
combination of three system with dominance of one
MIXED
importance of economics
- understand why there is a need for everybody, to allocate given resources
- make more rational decisions in spending and investing money
- to know how economy operates and have a take if government is doing great
scientific approach steps
- formation of a specific hypothesis
- systematic operation and gathering of facts
- application of logic to observe facts
- empirical testing to validate the hypothesis
- finding the reason for invalidation and repeating the steps
