Economics – Unit 1 Economics Fundamentals
2. Social science that deals with the study of the production, consumption, distribution of goods and services and the transfer of wealth to obtain those goods and services.
Public goods and services are paid for with taxes received from businesses and individuals.
Examples include national defense, streetlights, and roads and highways. Public services include welfare programs, law enforcement, and monitoring and regulating trade and the economy.
Economic security This refers to protecting consumers, producers, and resource owners from risks that exist in society. Each society must decide from which uncertainties individuals can and should be protected, and whether individuals, employers, or the government should provide or pay for this protection…(health care for elderly; Social Security, disability; unemployment compensation, etc.)
Economic equity – This means what is “fair”. Economic actions and policies have to be evaluated in terms of what people think is right or wrong. Equity issues often arise in questions dealing with the distributions of income and wealth.
Economic stability – This refers to maintaining stable prices and full employment and keeping economic growth reasonably smooth and steady. Price stability means avoiding inflation or deflation. Full employment occurs when an economy’s scarce resources, especially labor, are fully utilized.
Economic freedom – refers to such things as the freedom for consumers to decide how to spend or save their incomes, the freedom of workers to change jobs and join unions, and the freedom of individuals to establish new businesses or close old ones.
Economic Growth This refers to increasing the production of goods and services over time. Economic growth is measured by changes in the level of real gross domestic product (GDP). A target annual growth rate of 3 to 4 percent in real GDP is generally considered to be reasonable and sustainable.
Ex. shorter hours of labor will, ceteris paribus, reduce the volume of output
Macroeconomics, on the other hand, takes a much broader view by analyzing the economic activity of an entire country or the international marketplace.
Non-rivalrous – Additional consumption does not add to the cost of production
non-excludable – Regardless of who pays for it, one person consuming it; does not deny another person of the right to consume it–streetlights; sidewalks, etc..