Its 10/5 ECONOMICS Definition roots = ways of behaving Study of production distribution Liberal theory adam smith- wealth of nations (1776) Markets: economics relations organized by markets and price mechanisms Arise spontaneously Are self-regulating through natural laws Supply and demands Comparative advantage Unique goods & services Better prices SPECIALIZE in that area Actors in markets Make rational choices based on self-interest Equal; knowledgeable Use cost/benefit analysis to make these decisions Free markets will Maximize economic efficiency Create economic growth (through distribution may be unequal) Promotes individual ( atlas pg 97 map 69) Policies: free trade Deregulations Laiz faire Get rid of Non Tariff Barriers ( NTB?s) Rules and regulations Anything that Restricts trade other than taxes Examples: NAFTA CAFTA National/ Mercantilist Theory Assumptions National Wealth = National Power A nations economy is subordinate to national interest Markets functions w.in competitive state system States will attempt to maneuver into themselves in a better position than others Not enough $$ for all states to have the same wealth Goals Create positive balance of trade ( reduce imports/ increase exports) Create & protect domestic industry Limit others? competitive advantage Policies (protectionism) Tariffs Subsides& quotas (one of most common) Subsides Ex. Free $$ gov gives to farmers Give $ to producers to keep costs down Quotas Set limit of what others can bring into your country NTBs ( one of most common) Packaging etc Anything that restricts or limits trade/ imports State (nationalized) industry Take over industries Keep wealth w.in borders Protect countrys economy Ex. Communication Steel Marxist Theory karl marx& friedrich Engels- communist manifesto (1848) Industrialization period well on its way ** loook at date** Why are producers so poor Material world foundation for all of society Materialism: economic relations ( production & distribution of wealth) are the foundation of all societies Capitalist system : inherently unequal &class conflict inevitable Dialectic classes : capitalists (owners of the means of production) vs. Workers Workers expolited for profit (surplus capital) Cost of an item is the cost of material plus the labor The profit is actually exploitation Creates problems! Workers cant afford cost of living on wages Markets tends towards Disequalibrium Efficiency concentrates profits and created unemployment Workers Cant afford to buy the goods theyre making Booms and busts Always a struggle going on Policies: REDISTRIBUTION OF WEALTH
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