Economic questions Essay Example for Free

Economic questions Essay1. It has to do with game theory. In the prisoners dilemma, cardinal suspects are taken by the police and each told sepa appreciately that they can gain their freedom by manifesting against each other. If neither testifies, they each bequeath serve a six months sentence. If one testifies the other rest silent, the one leave alone go free and the other will serve 10 yrs. If both testify then both will serve 5 yrs. The best thing is for both to be silent, solely the more than likely scenario is that each, fearful of a long sentence, bails on the other and nobody wins. In economic science it is the investors hoping to ride the high flyers into the New Year the best out acclaim is for nobody to sell. Most course of studys, that is how it works and year end rallies leave everyone satisfied.2. Economic theory. Through regulation is the best way market failure or externalities are dealt with when they are harmful to society. Externality is an economic si de effect. They are the costs or benefits that come from economic activities that affect others than the individuals that re engaged in the economic activities. Some solutions are negative- taxes, positive-subsidy.3. Sources of income in a jacketist scrimping would be their property rights that entitle them to earn a profit for the use of their capital as risk in some form of economic activity. They would be related through repel by human capital. The knowledge and skill acquired by fatigue through education and turn over.4. The consecrate is persistent by a percentage of its turnover or sales.5. Investment is something investors decide how ofttimes they will reach on new investment. Example Producers have to decide whether to replace used up or obsolescent machinery, whether to expand production these costs will become an investment that in turn should make them money. thither are four principal determinants of autonomous investment, the level of technology, rate of inter est, expectation of future economic ripening and the rate of capacity utilization.6. With an equilibrium price. The price that equates quantity demanded to quality supplied. If any disturbance from that price occurs, unembellished demand or excess supply emerges to drive price back to equilibrium.7. The classical view of how our economy behaves is this If the economy were left on its own without the interference of government or the Fed. It would move towards an equilibrium rate of growth that would produce with whole minor interruptions, full employment without inflation. This hands off rests upon two impartial propositions well-nigh market, one that all markets are basically competitive and two, all prices are flexible up and downward approaching equilibrium. Unemployment is single a temporary condition caused by wage judge acclivity above the equilibrium rate. A shift in the extraction curves is the economys rate of unemployment and rate of inflation.8. Supply-side economi sts emphasize the importance of reducing tax rates. They accept the Keynesian idea that lower tax rates will increase consumer demand, but they believe a more important consequence is the added incentive it provides suppliers. For physical exercise lower corporate tax rates increase after tax profit, which induces suppliers to increase aggregate supply. lower berth income tax rates encourage more people to work longer, adding as well to aggregate supply.9. nest egg automatically converts to investment so that investment induced growth is dependent on saving.10. The division of labor into specialized activities that allow individuals to be more productive. The idea that labor productivity is a function of the spirit level of labor specialization.11. Upward sloping trend cutting through the cycle traces the economys issue performance over the course of a business cycle, measured either from recession to recession or from prosperity to prosperity. The upward sloping character of the trend line signifies economic growth.12. Every economy, whatever its level of national income, includes people earning different incomes. Knowing someones absolute income tells us little about that persons income status.13. Consumption spending is rooted in Status. High income people not only consume more goods and operate than others, but also set consumption standards for everyone else.14. Aggregate supply is the essential supply of goods and services that all firms in the national economy are willing to offer at varying price levels. Aggregate demand is the fare quantity demanded of these goods and services by households, firms, foreigners, and government at those varying price levels. Macroequilibrium is reach when aggregate supply equals aggregate demand.15. Consumption spending has tended to be more stable than investment spending in the past. MPC can be counted on to remain pretty much unchanged. Autonomous consumption is hardly likely to change. Investment spending is considered volatile. Economists identify changes in aggregate white plague as the key to understanding why national income changes. Changes in investment have highly enlarged effects on national income. The income by which income changes as a result of a change in aggregate expenditure is called income multiplier.16. The economys output or gross domestic product is the total value, measured in current market prices, of all final goods and services produced in the economy during a given year.17. One solution is to combine wage and price controls with a Keynesian style melodic line creating policy. Stabilization policy is one option.18. Four principle factors contributing to a nations economic growth, the size of the labor force, the degree of labor specialization, or the division of labor, the size of its capital stock and the level of its technology. Savings automatically converts to investment so that investment induced growth is dependent on savings.19. Demand deposits are onl y half of a banks business. Loans are the other. The bank makes a profit only on the loans it provides, not on it deposits. Borrowers benefit from inflation where lenders, where as lenders lose money.20. Through the circular flow model, how the economys resources, money, goods and services flow between households and firms through resource and product market.21. Economies with negative balances on current account will find their exchange rate expireing. And unless these rates are propped up by government intervention, they will fall to stem the currency outflows exist the exchange rate will keep falling. Eventually the rate will reach the level appropriate to a zero balance on current account. It takes only time. He would think we were habitual borrows.22. They are the what is and what it should be23. Nothing because the infrastructure is what an economys ability for outgrowth depends upon. Such as with education to educate people involves not only the task of acquiring complaisa nce but the funds needed to build the school and staff them.