Unit 2B economic theories in liberal societies Flashcards
what is economics?
The study of how people choose to use resources.
what are the 3 focuses of economics?
- Production
- Consumption
- transfer of wealth
what is scarcity?
State of resources being short supply
How does scarcity occur?
Not enough resources to meet essential needs and every individuals unlimited desires.
what are the 3 main economic systems when talking about economics?
- Centrally planned economy
- Mixed economy
- Market economy
How would a centrally planned economy respond to the 3 quetsions of economics?
-essentials are produced
-gov’t will produce it
-produced for ctizens
What are the 3 main questions when considering economics?
- What will be produced
- Who will produce it
- Who is it produced for
How would a mixed economy respond to the 3 quetsions of economics?
-essentials and wanted are produced
-gov’t and entrepeneurs will produce
-produced for citizens and people who can afford it
How would a Market economy respond to the 3 quetsions of economics?
-what people want will be produced
-entrepeneurs will produce it
-produced for people who can afford it
What did Adam Smith believe?
-Gov’t should stay out of economics, people working for self-interest will sort it out
Key principles of Adam Smith?
-supply and demand
-competition
-conusmer sovereignty
-profit motive
What is the invisible hand?
capitalis concept ensuring that needs/wants of society will be met bc entrepeneurs only sell what consumers want
Who is John Maynard Keynes?
Said in recessions, people would hoard their money instead of investing into the economy which would lead to prolonged recessions
