ACE Class Report # 64 – Economic Theory
Begin: 4/24/2024
Finish: 6/19/2024
Title: Economic Theory
Instructor: Farhad Naifey
Why I choose to Take this class:
To learn more about economics. Basic understanding about Economic theory will help me understand about the business world, improve my analytical and critical thinking skills.
What I learned from this class:
Economics:
Is the study of how people choose to use their scarce resources to meet their competing desires. Resources include: money, property and time. Scarcity force people to make choices about how to best use their resources. An economy is made up of a broad mix of participants – buyers and sellers; workers and employers; and business, governments and other organization – all involved in the production and exchange of goods and services. In a market economy, people compete for goods and services by offering and setting prices.
The organization of Economies:
Typically lies between two extreme models – capitalism and central planning. Under the Capitalist model, household and privately owned business trade goods and services in market at the other extreme, under the model of Central Planning, the government controls the economy, and it has a much larger role in choosing which goods and services to produce and how they will be distributed. For much of the 1900’s Soviet and China centrally planned their economies. The economies of all nations combine elements of capitalism and central planning. The economic mixture within a nation may change over time, i.e. the US and Canada have expanded economic regulation, spending and welfare programs since 1900’s. In the 1980’s Soviet and China began moving towards a less centrally planned economy.
The Free Market – Capitalist economies rely on Free Market, which permit people to engage in economic activities largely free from government control. Competition on both side of the market ultimately leads to a set of market prices where quantity supplied is equal to quantity demanded – the market is said to be in equilibrium.
Government Intervention – Even in Capitalistic systems, government play am important role. Government are different from household and business because Government can force people to pay taxes or take actions. As a result Government provide a number of services that business and household typically do not. In many economies, government play more expanded roles: fiscal policy – developed to managing the amount of tax revenue and =government spending; Monetary policy – managing the money supply and the value of the nation’s currency.
The World Economy: Since world War II, the national economies have again become more integrated with one another. The process, renamed Globalization in the modern era has been encourages by many factors including developments in transportation, communication and computer technology. Government and international organization are becoming more interested in promoting free trade. Evidenced by NAFTA, EU and WTO. Nearly all countries , however adopt some policies that restrict international trade to protect domestic business from foreign competition. The restrictions often force consumers to pay higher price for good from the protected business. Such restriction include import tariff and import quotas. Import tariffs and taxes on goods purchased from other countries. Import Quotas limit the quantity of goods that people can import from foreign countries. Some nation also pay subsidies to aid their own nations business. The practice of establishing trade barriers to help certain national business is commonly called Protectionism
Economics of Society:
The standard of living: I s a measure of the general well-being of an individual, family, or group of people. Economist use Gross Domestic Products per person, the most common measure of the average standard of living in a nations economy. Countries with the highest GDP typically have more food, consumer goods, better housing, greater educational opportunities and better medical care.
Economic Growth: Improvement in the standard of living typically occurs when an economy during and expansion, a period of economic growth. A period of decreased economic activity is called a recession or in severe case a depression. Pattern of fluctuation between expansion an recession is known as the business cycle.
Distribution of Income: From various sources: Profits, dividends, rent, transfer payment, capital gains. Distribution of income varies. The percentage of a population that lives in poverty is called the poverty rate and it is set by the World Bank.
How will this class contribute to my success upon release:
Economic knowledge helps improve my analytical and critical thinking skills. Knowledge of economy helps me understand the role of government in controlling our economy and setting policies. This knowledge will be conveyed to other communities which i hope to volunteer my services.
