The Capitalist Revolution and Inequality Flashcards
GDP
measure for the size of an economy, value of total output of goods and services produced in a certain time period
GDP per capita
average income of people in a country
disposable income
wages+ profit+ rent+ interest + government transfers received (market income), minus any outside transfers - what is left to spend out of the received
history’s hockey stick - upward turns?
1) GDP per capita
2) productivity of labor
3) speed at which news travels
4) climate change
Adam Smith’s invisible hand
coordination among actors can arise, without any person or institution consciously attempting to create it
economy and the environment
people thought natural resources are limitless, but as production rose, so did degradation of our natural environment
capitalism - definition
an economic system characterised by a combination of institutions - private property, markets and firms
private property, you can…
enjoy, exclude, dispose by gift or sale
capital goods
equipment, buildings and other inputs used in producing goods and services
markets
way of connecting people for mutual benefit, by exchanging goods and services, through buying or selling
3 characteristics of markets
reciprocated, voluntary, competitive
firm
a way of organising production, where:
1) capital goods are used in production
2) wages are paid
3) employees are directed
4) goods and services are property of owners
5) owners then sell those on markets to make profit
how did capitalism lead to growth in living standards?
technology and specialization
specialization
we become better and more efficient at production when each person focuses on a limited range of activities (economies of scale)
absolute advantage
ability to produce a greater quantity of a good or service using the same amount of resources
