UNIT 1: ECONOMICS

CONCEPT OF ECONOMICS
Economics is the study of how people choose to use resources
Resources include
Time, land, building, people, equipment and so on
The knowledge of how to combine them to create useful products and services
Important choices involve
How much time to devote to work/to school/to leisure
How many dollars to spend/save
How to combine resources to produce goods and services
How to vote/shape the level of taxes and the role of government
Well-being
a state characterized by health, happiness, and prosperity
Economic is the study of the production and consumption of good and the transfer of wealth to
produce and obtain those good
TWO MAIN TYPES OF ECONOMICS
Microeconomics: focuses on the actions of individuals and industries
Macroeconomics: analyzes the economic activity of an entire country or the international
marketplace
THREE ECONOMIC THEORIES
Adam Smith's theory: Classical School
He believed that people who acted in their own self-interest produced goods and wealth that
benefited all of society
He believed that governments shouldnʼt restrict or interfere in markets
Karl Marx's theory: Marxism
He believed that labor exploitation by factory owners and CEOs lead to social unrest and
class conflict
He theorized laborers should own and control the means of production to ensure social and
economic stability.
Keynes's theory: Keynesian School
Describes how government can act within capitalistic economies to promote economic
stability
This theory strongly influences US economic policy today
BENEFIT OF STUDYING ECONOMICS
Shapes the world
People and countries become wealthy
Can help one understand human thought and behavior