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Questions and Answers

What caused the Great Depression?

Stock market crash, bank failures, reduction in consumer spending.

What were the impacts of the 1970s Oil Crisis?

Increase in oil prices, stagflation, economic recessions.

What caused the Asian Financial Crisis?

Over-speculation in financial markets, collapse of currencies, high levels of foreign debt.

What were the impacts of the Russian Financial Crisis?

Russian government default, sharp devaluation of the ruble, collapse of the domestic banking system. Signup and view all the answers

What was a cause of the Argentine Economic Crisis?

Currency devaluation against the US dollar, government debt, economic mismanagement. Signup and view all the answers

What caused the Dot-com Bubble?

Overvaluation of tech companies, speculative investments in internet startups. Signup and view all the answers

What were the impacts of the Global Financial Crisis?

Global recession, massive job losses, government bailouts. Signup and view all the answers

What caused the European Debt Crisis?

Excessive government debt in Eurozone countries (C) Signup and view all the answers

What was a major factor in the Greek Debt Crisis?

High government spending and large public debt. Signup and view all the answers

What led to the COVID-19 Economic Crisis?

Global pandemic, lockdowns, disruption of global supply chains. Signup and view all the answers

What were the causes of the Sri Lankan Economic Crisis?

Foreign exchange crisis, foreign debt default, inflation. Signup and view all the answers

What is the main cause of Pakistan’s Economic Crisis?

High public debt, foreign exchange crisis, inflation. Signup and view all the answers

Define Economics.

The study of how to fulfill unlimited desires with limited resources. Signup and view all the answers

What does scarcity mean in economics?

Human wants for goods, services, and resources exceed what is available. Signup and view all the answers

Microeconomics focuses on the economy as a whole.

False (B) Signup and view all the answers

The invisible hand refers to self-interested individuals benefiting society as a whole.

True (A) Signup and view all the answers

Economics helps understand the complexities of human _____ when rational assumptions fail.

behavior Signup and view all the answers

Study Notes

Introduction to Economics

Economics is the study of how societies use limited resources to satisfy unlimited wants.
Defined as the study of how societies manage scarce resources.

The Great Depression (1929-1939)

Cause: Stock market crash, bank failures, reduced consumer spending.
Impact: Global economic downturn, widespread mass unemployment, deflation, and the collapse of international trade.

The 1970s Oil Crisis (1973-1974)

Cause: OPEC oil restrictions against Western countries.
Impact: Rapid increase in oil prices, stagflation (high inflation and unemployment), and economic recessions.

The Asian Financial Crisis (1997-1998)

Cause: Over-speculation in financial markets, collapse of currencies, high levels of foreign debt.
Impact: Severe currency devaluation in Southeast Asia, collapse of financial markets, and recessions in affected countries (Thailand, Indonesia, South Korea, Malaysia).

The Russian Financial Crisis (1998)

Cause: Drop in oil prices, excessive foreign debt, inability to control inflation.
Impact: Russian government default, sharp ruble devaluation, and collapse of the domestic banking system.

The Argentine Economic Crisis (1998-2005)

Cause: Currency devaluation against the US dollar, government and economic mismanagement, and high levels of government debt.
Impact: Hyperinflation, widespread poverty, default on debt, and collapse of the banking system.

The Dot-com Bubble (1999-2001)

Cause: Overvaluation of technology companies and speculative investments in internet startups.
Impact: Stock market crash, significant wealth loss, and bankruptcy of many dot-com companies.

The Global Financial Crisis (2007-2008)

Cause: Subprime lending crisis, excessive risk-taking by banks, and the collapse of Lehman Brothers.
Impact: Global recession, massive job losses, government bailouts, collapse of housing markets, and tightening credit markets.

The European Debt Crisis (2010-2012)

Cause: Excessive government debt in Eurozone countries (Greece, Portugal, Ireland, Spain, Italy), mismanagement of fiscal policies.
Impact: Bailouts from the EU and IMF, austerity measures, political instability, high unemployment, and weakening of the Euro.

The Greek Debt Crisis (2009-2018)

Cause: High government spending, tax evasion, and large public debt.
Impact: Severe austerity measures, bailouts from the EU and IMF, public protests, and a prolonged recession.

The COVID-19 Economic Crisis (2020-2021)

Cause: Global pandemic, lockdowns, disruption of global supply chains, and decline in consumer demand.
Impact: Global recession, mass unemployment, business closures, economic stimulus packages, and a rise in government debt.

Sri Lankan Economic Crisis (2022)

Cause: Foreign exchange crisis, high foreign debt, inflation, and political instability.
Impact: Food shortages, power outages, fuel shortages, widespread protests, and mass migration.

Pakistan's Economic Crisis (2023)

Cause: High public debt, foreign exchange crisis, inflation, and political instability.
Impact: Currency devaluation, inflation, rising import costs, and loss of purchasing power.

Scarcity

Scarcity is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources.

Branches of Economics:

Development Economics
International Trade
Monetary Economics
Mathematical Economics
Financial Economics
Environmental Economics
Issues in Pakistan Economy
Institutional Economics
Public Economics
Statistical Method in Economics
Econometrics

Additional Concepts

Opportunity Cost: The value of the next best alternative that is forgone when a choice is made.
Demand: The willingness and ability of consumers to purchase a good or service at a specific price and time.
Supply: The total amount of a specific good or service available to consumers at a specific price and time.
Market Equilibrium: The point where the supply and demand for a good or service are equal.
Law of Diminishing Marginal Utility: The satisfaction or utility derived from a good or service decreases as the quantity consumed increases, all things being held constant.