science of how to best use limited resources to satisfy unlimited wants and needs
economics (greek meaning)
rules of the household
Economics is also called
the dismal science
Who coined economics the "dismal science"
Sir Thomas Malthus
Factors of Production
land, labor, capital, entrepreneurship
reward of land
mental and physical capacity of workers
reward of labor
goods used to produce other goods
reward of capital
using other factors of production to start business
reward of entrepreneurship
studies decision making by a single individual, firm, or industry
studies decision making for the whole economy
addresses "what is" or verifiable questions
attempts to determine "what should be" based on value judgements
Economic Model Building
1. identify problem
2. model development
3. accept or reject theory based on model results
latin, other things being equal
a system in which the factors of production are privately owned and operated for a profit
What book did Adam Smith write?
Wealth of Nations
What year did Adam Smith write Wealth of Nations
economic force that encourages people to improve their own life by providing for the needs of society
1. own property
2. keep profits (after taxes)
3. compete in an open market
4. to choose
role of govt in capitalism
1. provide national defense
2. insure domestic tranquility
3. maintain an infrastructure
4. establish a legal system
5. provide public education
problems with capitalism
1. big companies aren't sensitive to dollar values of consumers
2. lack of perfect information
3. people don't act rationally
4. uneven distribution of wealth
system in which all factors of production are controlled by the government
Who wrote the Communist Manifesto?
Karl Marx and Friedrich Engels
What book did Karl Marx and Friedrich Engels write?
the Communist Manifesto
What year was the Communist Manifesto written?
What was the communist manifesto about
the proletariat (working class) vs the bourgeoise (factory owners)
3 stages of communism
1. bloody revolution (coup d'etat)
2. dictatorship of proletariat
3. classless society
What was Marx's version of the Wealth of Nations called?
What was Das Kapital?
multivolume book about communism
When did Marx start Das Kapital?
Who finished Das Kapital?
problems with communism
1. shortages of goods
2. limited personal freedoms
3. lack of profit motive encourages inefficiancy
system in which government runs all important industries, but individuals may own less important businesses
What does socialism acknowledge?
benefit of capitalism (wealth creation)
What does socialism believe about wealth distribution?
government should distribute wealth more equally
examples of wealth distribution
low cost healthcare, retirement, unemployment benefits, public transportation
problems with socialism
1. high taxes
2. govt owned industries are often inefficient
What was the economic base in the 1700s?
What happened in the early 1800s?
What type of economy did the north have?
What type of economy did the south have?
What happened from 1861-1865 that was an economic setback?
What did railroads do?
increased interstate commerce
What happened in the 1900s?
abuse of power by large businesses
Abuse of power by large businesses led to what?
antitrust laws, growth of labor unions
people who owned large, powerful companies
What happened from 1914-1918?
What happened to the economy after WWI ended?
economy was strong
strong economic period after WWI