The Origins of Economics Terminology

Questions and Answers

What do the Greek roots of the term 'economics' primarily refer to?

Resource allocation

Management of wealth

State management

Household management (correct)

Which of the following is considered the central economic problem in every society?

Inflation

Scarcity (correct)

Globalization

Unemployment

What is the opportunity cost of making a choice?

The time taken to make the decision

The total cost involved in the choice

The benefit gained from the choice made

The value of the next best alternative given up (correct)

Which factor of production is associated with profit?

Entrepreneurship Signup and view all the answers

Which of the following best describes 'efficiency' in economics?

Productivity and proper allocation of resources Signup and view all the answers

What are the four basic economic questions that societies must address?

What to produce, how to produce, how much to produce, for whom to produce Signup and view all the answers

In the context of production, who are considered the consumers?

Individuals or households Signup and view all the answers

Which aspect of economics does 'equity' refer to?

Justice and fairness Signup and view all the answers

What does positive economics primarily focus on?

The analysis of economic conditions as they are Signup and view all the answers

Who is known as the 'Father of Economics'?

Adam Smith Signup and view all the answers

Which statement best defines normative economics?

It assesses economic conditions based on desires for improvement Signup and view all the answers

What does the term 'Ceteris Paribus' imply in economic analysis?

All other factors are held constant to isolate relationships Signup and view all the answers

Which book by Adam Smith is considered a significant contribution to economic theory?

Wealth of Nations Signup and view all the answers

Microeconomics primarily examines which of the following?

Individual firms and households' economic decisions Signup and view all the answers

Which aspect does macroeconomics primarily focus on?

Aggregate economic performance Signup and view all the answers

What concept did David Ricardo primarily contribute to economics?

Political economy analysis Signup and view all the answers

What major issue did John Maynard Keynes address in his influential book?

Solutions for mass unemployment Signup and view all the answers

What defines a traditional economy?

Families produce goods only for their own consumption. Signup and view all the answers

Which of the following is a key concept in microeconomics?

The laws of supply and demand Signup and view all the answers

Which of the following would be an example of a normative economic statement?

A minimum wage should be set to improve living standards Signup and view all the answers

What is a characteristic feature of a command economy?

Government dictates production methods and distribution Signup and view all the answers

Which economist introduced the concept of 'marginalism'?

Alfred Marshall Signup and view all the answers

Which statement accurately describes a market economy?

People make decisions primarily based on private ownership. Signup and view all the answers

What is the primary relationship explored under the 'Ceteris Paribus' assumption?

The cause-and-effect between two specific variables Signup and view all the answers

Which economist is known for developing a general economic system analysis?

Leon Walras Signup and view all the answers

Which of the following best describes the focus of microeconomics?

Examining individual and business economic behavior Signup and view all the answers

Which statement is true regarding socialism?

Key enterprises are owned by the state. Signup and view all the answers

What was the major outcome of Karl Marx's work, Das Kapital?

Basis for socialist thought Signup and view all the answers

How is a mixed economy defined?

It combines elements of market and command economies. Signup and view all the answers

Which of the following economists emphasized the concept of the 'invisible hand'?

Adam Smith Signup and view all the answers

Which element is NOT studied in macroeconomics?

Individual savings accounts Signup and view all the answers

What role do external economic agents play in macroeconomics?

They influence domestic economies through trading. Signup and view all the answers

What does Keynes attribute to low levels of investment during a depression?

Low business confidence Signup and view all the answers

Which economic model is recognized for its analysis of the goods and money markets?

IS–LM model Signup and view all the answers

Which economist is associated with the monetarist view within the post-Keynesian framework?

Milton Friedman Signup and view all the answers

What is the significance of wage rate stickiness during a depression, according to Keynes?

It may worsen the depression by reducing consumption Signup and view all the answers

Which stream of thought focuses on the national expectations hypothesis?

New Classical Economics Signup and view all the answers

What was a notable outcome of the development of post-Keynesian economics in the 1940s and 1950s?

It introduced systematic regulation of private and public institutions Signup and view all the answers

Which of the following economists is NOT typically associated with post-Keynesian economics?

Milton Friedman Signup and view all the answers

In the context of developing countries, what aspect of New Classical Economics is particularly emphasized?

National expectations hypothesis analysis Signup and view all the answers

Study Notes

Origin of the Term "Economics"

Derived from Greek roots: "oikos" (household) and "nomus" (management).
Oikonomia indicates "management of household" initially, evolving to mean "state management" as Greek society grew into city-states.

Scarcity

Central economic problem for all societies, defined as "limited resources in demand."
Fundamental to the study of economics, driving the reality of economic choices.

Factors of Production

Land: Reward is rent.
Labor: Reward is salary/wages.
Capital: Reward is interest.
Entrepreneurship: Reward is profit.

Circular Flow Model

Illustrates interactions between different economic agents and the flow of goods, services, and resources.

Opportunity Cost

Represents the value of the next best alternative forgone when making choices.
Affects both producers (goods not made) and consumers (options not chosen).

Basic Decision Problems

Consumption: Managed by consumers.
Production: Managed by producers.
Distribution: Overseen by government.
Growth Over Time: Involves society and global dynamics.

Four Basic Economic Questions

What to produce?
How to produce?
How much to produce?
For whom to produce?

3 Es in Economics

Efficiency: Focus on productivity and resource allocation.
Equity: Ensures justice and fairness in economic dealings.
Effectiveness: Measures achievement of goals and objectives.

Positive vs. Normative Economics

Positive Economics: Analyzes "what is" using objective methods.
Normative Economics: Evaluates "what should be," encompassing ethics and welfare considerations, often linked to policy formulation.

Ceteris Paribus Assumption

Means "all else being equal," used to analyze relationships between two variables while holding other factors constant.

Branches of Economics

Microeconomics: Studies individual decisions and market interactions, focusing on firms and consumers.
Macroeconomics: Analyzes broad economic aggregates like national income, spending patterns, and overall economic performance.

Types of Economic Systems

Traditional Economy: Focus on subsistence and self-consumption.
Command Economy: Production decisions dictated by the government.
Market Economy: Resources owned privately, decisions made by individuals.
Socialism: Key enterprises owned by the state, while some private ownership exists.
Mixed Economy: Combines elements of market and command systems, like in the Philippines.

Important Economic Terms

Wealth
Consumption
Production
Exchange
Distribution

Brief History of Economic Thought

Classical Economics: Dominated by Adam Smith, David Ricardo, and Karl Marx, establishing foundational theories.
Neoclassical Economics: Introduced concepts like market equilibrium and marginalism.
Keynesian Economics: John Maynard Keynes focused on government intervention for unemployment and recession recovery.
Non-Walrasian and Post-Keynesian Economics: Developed new macroeconomic models and regulatory frameworks.
New Classical Economics: Emphasized adherence to expectations and new theories relevant to developing countries.

Discussion Questions

Analyze how scarcity impacts the economic system within a specific country.

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Description

Explore the origins of the term 'economics' and its Greek roots. Learn how concepts like household management evolved into broader ideas of state management and address the basic economic issues, such as scarcity, that societies face. This quiz will help solidify your understanding of the foundational elements of economics.