Introduction to Economic Policy A Lecture 1 Flashcards
where does the word ‘economy’ come from
the greek word meaning “the one who manages a household”
what is the definition of economics
the study of how society manages its scarce resources
examples of society’s scarce resources
time, capital, natural resources eg land, labour
what is capital
equipment and structures used to produce goods and services
what is labour
human effort both mental and physical
what is studied in economics (3 things)
- how people make decisions 2. how people interact with eachother 3. analyse trends that effect the economy as a whole
what is macro economics
forces and trends that affect the economy eg unemployment, inflation, economic growth
what is microeconomics
individuals and firms, households, how they make decisions and interact in markets
economic policy objectives
efficiency, equity, growth, stability
what is opportunity cost
what you had to give up in order to get the good. What else could we have done with the same time and money?
what are marginal changes
small adjustments to an existing plan of action eg. one more hour of study
why do we use margins
to make it easier to see the difference and make better decisions
what is economic activity
how much buying and selling goes on in the economy over a period of time
What is an economy
all the production and exchange activities that take place every day
What is capital
Man made things used to create wealth eg machinery, buildings
