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Economics Midterm 1 Review - Chapters 1-3.docx

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Department
Economics
Course
Economics 1021A/B
Professor
Michael Parkin
Semester
Fall

Description
Economics Midterm 1 ReviewCHAPTER 1DEFINE ECONOMICS AND DISTINGUISH BETWEEN MICROECONOMICS AND MACROECONOMICSAll economic questions arise because we want more than we can getOur inability to satisfy all our wants is called scarcityBecause we face scarcity we must make choicesThe choices we make depend on the incentives we faceAn incentive is a reward that encourages or a penalty that discourages an actionEconomics is the social science that studies the choices that individuals businesses governments and societies make as they cope with scarcity and the incentives that influence and reconcile those choicesMicroeconomics The study of CHOICES that people and businesses makeThe way these choices interact in marketsThe influence of governmentsie why people are buying more of one product and not the another How would tax on ecommerce after eBayMacroeconomics the study of the performance of the national economy and the global economyie why did inflation in Canada start to increase in 2008 Can the BOC keep inflation rate under control by raising interest ratesEXPLAIN THE TWO BIG QUESTIONS OF ECONOMICS1How do choices end up determining what how and for whom goods and services are producedoGoods and services are the objects that people value and produce to satisfy wantsWhatoWhat we produce changes over timeoSixty years ago almost 20 percent of Canadians worked on farms Today that number is 3 percentoToday almost 80 percent of Canadians provide servicesHow oGoods and services are produced by using productive resources that economists call factors of productionFactors of production are grouped into four categoriesoLand the gifts of natureEconomics Midterm 1 ReviewoLabour the work time and effort of peopleoCapital the tools instruments machines buildings and other constructions that are used to produce goods and servicesoHuman capital the knowledge and skill that people obtain from education onthejob training and work experienceoEntrepreneurship the human resource that organizes land labour and capitaloHow can choices made in the pursuit of selfinterest also promote social interestFor WhomWho gets the goods and services depends on the incomes that people earno Land earns rento Labour earns wages o Capital earns interest Entrepreneurship earns profit2When is the Pursuit of SelfInterest in the Social InterestEvery day 69 billion people make economic choices that result in What How and For Whom goods and services get producedoDo we produce the right things in the right quantitiesoDo we use our factors of production in the best wayoDo the goods and services go those who benefit most from themYou make choices that are in your selfinterestchoices that you think are best for youChoices that are best for society as a whole are said to be in the social interestThe Big Question Is it possible that when each one of us makes choices that are in our selfinterest it also turns out that these choices are also in the social interestFive questions in todays world illustrate the tension between selfinterest and the social interesto Who benefits from and who bears the cost of globalizationo Who are the winners and losers in the information ageo Are we changing the climate and endangering our planeto Are we going to run out of forest and fish resourceso Has greed caused the great recession of 20082009Five topics in todays world that illustrate the tension between selfinterest and social interestoGlobalization expansion of international trade borrowing and lending and investingoThe informationage technology 1990s2000s
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