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20 Cards in this Set

  • Front
  • Back
The study of the use of choices in the face of scarcity
Why is an understanding of history useful to economists?
1. Choices matter- there are unlimmited wants but limmited resources thus this scarcity forces people to make choices
2. Costs Matter
3. Incentives Matter- affect choices in a predictable way
4. Institutions Matter- rules of the game, legal system customs and cultural norms
5. Evidence matters- theories should be tested and retested using data
economic theory
a reliable generalization that allows us to understand and predict choices
Why was the Conrad and Myers study considered a turning point in the study of American economics?
"The Economics of Slavery in the Antebellum south"- Estimates the profitability of slavery-employed standard asset pricing model (compared slavery ROR to ROR on alternative investments. Claimed that slavery was profitable and there was no evidence that slavery would have died out on its own
uses the scientific method/hypothesis testing
applies facts (data) to explicit theory (model)
Uses data for testing theories
Expanded the range of topics
What mathmatical relationship is illustrated by the rule of 70?
The rule of 70 illustrates the relationship that 70 divided by the annual growth rate will equal the number of years until that growth rate doubles. Example: 70 divided by a growth rate of 10 is equal to 7 which is the number of years before the growth rate 10 is equal to 20
Describe the main features and trends in the Us economic development over the past 250 years
Moderate and Sustained growth
why is the united states considered an economic sucess story
Economic development- attempts to measure the overall well-being of a society often considers trends, growth rates and historical perspectives. GDP- total monetary value of all goods and services produced in domestic economy in a year. GDP 2004-11.75 mil. GDP per capita- 40,100 positive trend
What are the primary determinants of economic development?
Resources/Inputs-land, labor, captial
Productivity- output per unit of input
Describe the Sources of Productivity
Technology-invention and innovation
Specialization and division of labor-
Investment in human capital-education
realization of economies of scale-decline in sost per unit
mangerial and organizational improvements
Why do institutions matter when explaining economic development?
Stable and limmited government
relatively peaceful domestic and international relations
Secure money and banking system
laws establishing and protecting private property rights
market orented economy
Describe the key features of "the Little new deal"
Optimism and social change through government

Kenedy's New Frontier- space program, aid to education, concerns with poverty

Johnson's Great Society- Hand up not a hand out. Tax surcharge to cool economy- actually not that effective. expansion of social security benefits. Medicare, medicaid,Economic opportunity act (job training, federal loans to farmers and small businesses.
Is going to be
There is no need to
Because the Lord has you
in the palm of him hand
Trust in the Lord with all your heart
And lean not on your own understanding
In all your ways acknowledge him
and he will make your parhs straight