Economics Conclusion Activity.

*Disclaimer: I tried my best, but the graph wouldn’t insert properly, so I’d recommend downloading it
and reading it that way*

This above mind map represents a revised version of my original mind map that I did at the
beginning of the semester.
This differs from my original graph in several ways, most notably in that it expands upon what
was in my previous mind map and uses proper terms. Also, it’s much more interconnected when
it comes to economics, typically nothing happens in isolation, so pretty much any aspect of the
economy will have some effect on most of if not all the rest of the economy overall. If one
country for example was to experience an economic collapse, other countries that rely on it for
trade and or banking will suffer as well (e.g., Great Depression).
Perhaps the biggest difference however is the cyclical nature of economic instability that I failed
to capture in my previous mind map. The Exact details of which I will explain in the definition of
the terms on the next several pages.
Economics Conclusion Activity. 2

Explanation of Terms:

1. Firms and Households: Households provide firms with labor, investment, land, and

capital. Firms provide products and services to households, (not shown due to not

wanting to make it too convoluted). Both contribute to both supply and the demand for

all resources, products, and services in the economy. In addition, both firms and

households pay taxes to the government.

2. The Fluctuations of supply and demand, in addition to the spending habits of

households and firms, creates either economic devaluation (the value of goods and

services go down) and economic revaluation (where the prices of goods and services go

up). This fluctuations in price across all products leads to either Inflation, or Deflation

(Equilibrium isn’t really a term its just a representation of there not being too much of

either). Which are essentially revaluation and devaluation across all goods and services

respectively. If these fluctuations are small and predictable, then it creates an

environment of economic stability, which in turn encourages both households and firms

to spend more, and thus grow the economy overall.

3. If inflation and deflation increase beyond average/normal levels, then hyperinflation or

hyper deflation occurs. These both create economic instability as both households and

firms cut spending so that they do not loose resources. This, in turn, leads to the

shrinkage of the economy. If such conditions continue then it is called a recession, and

if it lasts even longer, then it’s called a depression. Depressions and recessions lead to

more economic instability, creating a downward spiral of economic shrinkage that is not

easily stopped. (Side Note: Hyperinflation can lead to a collapse of the market, in which
Economics Conclusion Activity. 3

inflated prices dropped exponentially very quickly, leading then to hyper deflation. This

is not represented as to make the mind map less convoluted).

4. In addition to contributing to supply and demand. Both firms and households can*

export their resources for the sake of profit. These are exported onto the Global

Market. They can also Imports resources to increase Supply. These Imports are

subject to Tariffs, which are essentially a tax on foreign goods, which is paid to the

government.

5. The Government’s Economic Policy directly affects and helps to manage rates of

inflation and deflation, in the aim to make them Predictable and create economic

stability.

6. Through the Government, Central banking is set up, which regulates how much

currency is in the economy. To combat hyperinflation/deflation the central bank

must either reduce or increase the amount of currency in the economy to restabilize it.

My Favorite Topic:

To be completely honest, its hard for me to pick one topic that I enjoyed more over the rest. I

enjoyed every part of the course. However, if I were to pick just one, I would have to say that I

found the contrast between Macro and Microeconomics to be very interesting. Learning about

these filled in a lot of the gaps in my knowledge and drew connects between the various different

topics we have done over the course of the semester.

Economics Conclusion Activity. 4