Introduction to Economics

This set of flashcards covers key concepts from the lecture on the origins and principles of economics, highlighting definitions, theories, and methods in the field.

Etymological meaning of economics

The science of household management, derived from the Greek word 'oikos' meaning family domain.

Aristote’s view of economics

Distinction between economic activity (related to family life) from politics (related to city life)

Modern definition of economics according to Robbins

The study of how human beings use scarce resources for alternative purposes to satisfy their needs.

Stiglitz’s definition of economics

Economic science studies how individuals, companies, governments, and other organizations make choices, which determine how society's resources are used.

Scarcity

Refers to limited resources in the face of unlimited needs, leading to opportunity cost.

Homo œconomicus

Concept of rational human behavior in making choices regarding economic activity.

Significance of debate in economics

Different economists can have contrasting recommendations, leading to various possible economic policies.

Analysis of economic dynamics’ problem

Economic data doesn’t “exist” inherently and must be developed, leading to difficulties in establishing cause-and-effect relationships.

Purpose of economic modeling

Simplifies complex reality to study specific features, often using assumptions like 'ceteris paribus' to isolate variables.

Three levels of economic analysis

Microeconomics (individual behavior), Macroeconomics (economic aggregates), and Mesoeconomics (sectoral relations)

Goal of economic analysis

Establish predictions, analyze agent behavior, identify effective policies, and understand agent coordination and institutional complexities.

4 aggregates to regulate the economy

• Economic growth

• Unemployment rate

• Inflation rate

• Balance of trade/current account balance