lecture 1 - Capitalism and the market economy

Question 1

what is economics>

Answer 1

the study of how people interact with each other, and natural environment, in producing livelihoods

Question 2

what is capitalism?

Answer 2

an economic system in which is defined by markets, firms and private property

Question 3

what has the rise in living standards been accompanied by?

Answer 3

change sin population and the way people live

change sin equality between countries

Question 4

what is the hockey stick model?

Answer 4

a graph showing the rise in GDP over 1000 years between different countries

Question 5

what are the countries in the hockey stick model?

Answer 5

china, india, britain, italy and japan

Question 6

1000 years how can the hockey stick be describes?

Answer 6

economically flat

period of stagnation

Question 7

when did britains GDP start to rise?

Answer 7

around the late 1700s early 1800s

Question 8

when did japan/italy start to grow?

Answer 8

not till 1900s

Question 9

how is the growth rate of GDP worked out?

Answer 9

change in GDP / original GDP

Question 10

how can you work out the change in GDP

Answer 10

work out difference
divide by original number
times by 100

Question 11

in some countries when was substantial improvements in living standards seen?

Answer 11

not until they gained independence from colonial rule of inference from european nations
(india 1947)

Question 12

who was the founder of the field of understanding hockey stick growth?

Answer 12

adam smith who wrote the wealth of nations

Question 13

what are two things that can be gathered from the hockey stick?

Answer 13

• for a very long time living standards did not grow in any way
• when sustained growth it happened at different times at different places

Question 14

what is GDP per capita?

Answer 14

an estimate of living standards

total income in a country divided by population

Question 15

what is GDP as a measure?

Answer 15

totally output of an economy

Question 16

what is disposable income?

Answer 16

a meander of their living standards but ne that omits important aspects of wellbeing
any salaries/rent/proft etc minus any transfer to others and governments

Question 17

what is a person living standards?

Answer 17

how well off a person is

Question 18

why is disposable income an insufficient way of measuring wellbeing/living standards?

Answer 18

leavers out

• social and physical enviro (friends and clean air)
• goods endservices we don’t buy (education dn healthcare)
• goods/services provided in the household (meals or childcare)

Question 19

why is average disposable income not a correct way of measuring average wellbeing?

Answer 19

there may be very big disparities between groups within a country
such as richest and the poorest
doesn’t reflect the real income of some people

Question 20

why might GDP be a beer way of measuring living standards than disposable income?

Answer 20

it includes goods and services provided by the government

but these can be hard to value

Question 21

what is a technology?

Answer 21

a process that uses inputs to produce an output

Question 22

what is an explanation that explains hockey stick growth?

Answer 22

technological progress

the oermannat technological revolution

Question 23

why did the permeant technological revolution occur?

Answer 23

as more technologies were created the time in which it took in production fell by each generation

Question 24

by reducing the amount of time it takes to produce thing what has happened?

Answer 24

allowed increase in living standards

Question 25

what is meant by a connected world?

Answer 25

everyone in contact with eahcother as a result of the technological revolution

Question 26

what can be used to compare to evidence of the permeant tech rev?

Answer 26

the speed in which information travels

Question 27

what is another explanation of the hockey stick growth?

Answer 27

the growth in poepelualtion

Question 28

what does increased productivity of labour in agriculture mean ?

Answer 28

fewer farmers are needed in order to produce the same output

Question 29

as more people left farming what happened?

Answer 29

they pursued other careers meaning the growth in cities

Question 30

what are some of the consequence sthat have arisen from the hockey stick growth?

Answer 30

- global impacts like climate change - local impacts such as pollution, deforestation and congestion increased production has increased the amount of fossil fuel burins and other materials that are needed in technologies

Question 31

what is the economy part of?

Answer 31

society which is part of the biosphere (collection of all forms of life)

Question 32

what is an economic system?

Answer 32

way of organising the production and distribution of goods and services in an entire economy

Question 33

what is an important form of private property, excluding an insitution?

Answer 33

capital goods e.g materials, patent and equipment

Question 34

what is a market?

Answer 34

a way of connecting people who mutually benefit by the exchange of goods and services in which are reciprocated voluntary exchanges of buying and selling

Question 35

what are essential parts to how a firm works?

Answer 35

firm and market in that inputs and outputs ar epirvate property firms use market to sell outputs

Question 36

why did adopting capitalism transform many economies?

Answer 36

- private incentives for cost reducing innovation - firms led by those with proven ability to produce goods at a low cost - public policy supporting these condition

Question 37

what are the two sets of conditions that make a capitalist economic system dynamic?

Answer 37

economic conditions and political conditions

Question 38

what eceomic conditions mean that capitalism is not dynamic?

Answer 38

- private property is insecure - monopolised markets / no competition - leadership in forms comes from inheritance (no merits) lack innovation / bankruptcy of firms /

Question 39

why are political condition s important to the dynamism of capitalism?

Answer 39

it can set policies regarding whether private property is secure etc

Question 40

why might there be divergence among latecomers of capitalism?

Answer 40

for all the reasons for the economic conditions needed

Question 41

how can you measure inequality between countries?

Answer 41

using the mini coefficient

Question 42

what is thegini coefficient?

Answer 42

indicate show much disparity there is in income and other measure across income 0= no inequality higher the higher to 1 the higher th e inequality

Question 43

what do some countries with high income GDP have?

Answer 43

high inequality | as a lot of the rich people won most of the money

Question 44

what is economics about?

Answer 44

- how we acquire things/food/clothing/shelter - how we interact with each other - intercat with natural environment - how these things change over time