What is Economics?

Flashcards about Economics

Economics

The study of behaviour & incentives. It is a social science that applies rigorous methods to the study of the social world.

Incentives

The factors that lead individuals to make specific choices. Can be positive or negative.

Microeconomics

The study of decisions made by individuals, households, and single firms.

Macroeconomics

The study of aggregate behavior; how large groups of people and businesses work together and react to incentives.

Gross Domestic Product (GDP)

How much stuff a country made in a given year.

Three components of production

Land, labour, and capital.

Capital

Not just money, but what money can buy, including technology and materials.

Self-interest vs. Social interest

Knowing when people acting in their own interest makes society better off, and when it does not. Understanding this helps us know when we need to “take down the system” or have respect for it.