Economics Flashcards
What is scarcity?
Limited resources + unlimited wants
What are the scarcity questions?
What to produce?
How to produce?
For whom to produce?
What are the four types of economies that we studied?
Far Left: Command Economy (Centrally Planned)
Centre Left: Mixed Left (Social Welfare)
Centre Right: Mixed Right (Welfare Capitalism)
Far Right: Market Economy (Laissez-Faire)
What did Adam Smith believe?
Wealth is created through productive labour
Self-interest motivates people to but their resources to best use
Believed in a market economy and Laissez-Faire capitalism
What did Karl Marx believe?
He called for a revolution of the workers because the system couldn’t be fixed otherwise
The bourgeoisie and proletariat are in a constant state of class warfare
Disappearance of class, a centrally planned economy, increasing equality, and wages distributed by performance
Believed in a command economy and a centrally planned economy
What are four features of a right-wing economy?
Private property
Competition
Profit motive
Freedom to buy and sell
What are two advantages of a right-wing economy?
Because of supply and demand, it ensures that the most desired goods and services are produced
Goods and services are produced in the most efficient way possible which causes growth in the economy
What are two disadvantages of a right-wing economy?
There isn’t enough to government intervention to protect everyone, lots of poverty
Extremely wide gap between super rich and super poor
What are four features of a left-wing economy?
The government creates central plan
Wages distributed due to performance
Disappearance of class
Increasing equality
What are two advantages of a left-wing economy?
Central authority can quickly demand higher production of goods in times of crisis
Social welfare is seen as a priority
What are two disadvantages of a left-wing economy?
Lack of competition inhibits innovation
Inefficiency of goods and services being produced
Who were the Fabians?
Left wing economic reform through democratic means
A belief in the importance of nationalization of key economic infrastructure
Faith in human reasoning and the ability of society to evolve
Rejected Marx’s belief in class conflict and instead believed the problem was between a very small group of super-rich financiers and the entire community
What are Demand-Side Economics?
Monetary Policy: reduce interest rates which makes it easier for consumers to pay off debts
Fiscal Policy: rebalance tax rates so that consumers receive a lower tax rate than more wealthy individuals
Examples: John Maynard Keynes, FDR’s New Deal, Hitler’s rebuilding of Germany
What are Supply-Side Economics?
Monetary Policy: increasing the amount of money in circulation to allow for lower interests rates or lower inflation
Tax Policy: reduce taxes in businesses to lower market prices and expand into new markets and open up jobs
Examples: Milton Friedman, Reaganomics
How does the Swedish economy work?
Extreme wealth is taxed so everyone is middle class
Government programs that help everyone (healthcare, education)
Indicative planning: there are economic plans for the society, organizes the economy
Organized labour, social programs, redistribution of wealth
