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Economics Flashcards
Mercantilism
Wealth of a nation is measured by its stock of gold and sliver. (trade surplus)
Invisible hand
Individuals acting in their own self-interest unintentionally contribute to the public good
comparative advantage
How trade benefits both parties even if one is more efficient in producing everything
John Stuart Mill
Social welfare (maximize overall happiness), government intervention is necessary, liberty and individual freedoms
Marginal Utility
As you consume more of a good, the additional satisfaction from each unit decreases
Aggregate Demand
Total demands for goods and services in the economy
Fiscal Policy
Government spending and taxation can be used to stimulate or slow down the economy.
Recession
Government action is necessary to stabilize the economy.
Behavioral Economics
People don't always make rational decisions due to psychological biases and emotions.
Classical Economics
Free markets can regulate themselves. There is an equal distribution of weath.
Austrian Economics
Private ownership of property, and limited government. Too much of an item is bad (marginal utility), unlike classical too much of something is dissatisfactory. Inferior goods don't get made in plentiful because of the labor.
Keynesian Economics
Encourages government action to increase or decrease demand and output
Colonialism
means of acquiring wealth
Labor theory of value
the value of goods is based on the labor used to produce them
The quantity of money theory
The money supply effects inflation and output (reduce government intervention)
