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Economics Part 3
| Question | Answer |
|---|---|
| What would happen to the availability of goods and services if all work ceased for the next three weeks? Where would the lack of production first show up? | If production of new goods should cease for any extended period of time, the scarcity of the goods would become very apparent. |
| Is labor scarce? What ends would you like to see accomplished, which require labor? | Yes, labor is scarce, because people’s unfulfilled wants are added to what they might reckon to be needs. The potential demand for labor is unlimited and that is the reason for asserting that labor is scarce. |
| “Consumer economics” was mentioned as a term used for an attempted change in economic thought. How have these “new economists” attempted to change the problem being studied in economics? 95 pg. | The problem they see is not production, but distribution of goods. To achieve that end, they are justifiers & promoters of gov programs to redistribute the wealth & promote ever-widening consumption. Trying to keep the young off the job market |
| The problem of production is not merely one of making reproductions. Describe the main problem of production. 96 | To produce goods that are in sufficient demand to trade for goods that the producer wants. The problem for every man who would trade is he is to carry his own weight in producing either what he can use or what someone else wants enough to pay his price. |
| In what ways have journalists promoted the ideas of those who argue that surplus production has become the economic problem of industrial nations? | Encouraging government programs which redistribute income from those who would save to those who would borrow in society. |
| Thrifty | Implies prudent planning in the disposition of resources so as to avoid unnecessary waste. |
| Frugality | Thrifty management in the expenditure or consumption of money, materials, etc. |
| Political Economy | Economics as a branch of knowledge or academic discipline. |
| Economic System | System of producing & distributing of goods & services & allocating resources in a society. The combination of the various institutions, agencies, entities and consumers that comprise the economic structure of a given community. |
| Economics | Economics is the systematic setting forth of the most effective means for providing those goods that are most wanted with the least use of the scarce means for providing them. |
| Scarcity | The basic condition confronting man on this planet. |
| Means of Production | Are scarce and the facilities and resources for producing goods. Broken down into three categories- Land, Labor, and Capital. |
| Land | Includes all the materials and resources on and under the earth that are a part of it. Land is scarce. |
| Labor | Also scarce and is physical work by people |
| Capital | As goods used to produce other goods and is scarce. |
| Economic Goods | Those things that are wanted that are scarce. |
| Karl Marx & Friedrich Engels | Wrote the Communist Manifesto in 1848 |
| The Communist Manifesto | A socialist manifesto written by Marx and Engels (1842) describing the history of the working-class movement according to their views |
| John Kenneth Galbraith | Economist who began to make an impact in the 1950s. |
| Consumer Economics | Broad field, principally concerned with microeconomic analysis behavior in units of consumers, families, or individuals. It sometimes also encompasses family financial planning and policy analysis. |
| Fallacy of Abundance | The notion of over abundance of goods and services. |
| What would it be like if you had to live in a totally self-sufficient manner? What goods that you currently consume would you have to give up because you could not produce them yourself? | Highly disciplined, long work hrs, & farmers at the mercy of the weather. Went into debt, might lose his land & have become a renter or wageworker. The farmer was limited to his own skills & what could be produced well on his land for the goods he had. |
| During the past twenty years, what occupations have vanished as a result of the changing market place? | In the U.S. in 1800, it is estimated that 80-90 percent of the population lived on farms. More or less self-sufficient farms could be found through the 4th decade of the 20th century, but they were becoming scarcer and scarcer. |
| What are the advantages of market exchange? What are some dangers of dependence on market exchange? | Advantages: able to enjoy the gains from comparative advantage. The exchange of money in the economy is a big means of obtaining goods. Disadvantages: Too heavy reliance on a single specialty leaves the individual exposed to changes and circumstance |
| How has gift giving substantially met some people‘s needs? | Children being taken care of by parents. Giving to meet temporary needs or on special occasions has long been widespread in America. In the case of natural disasters, such as floods, hurricanes, and earthquakes brings outpours of gifts to the victims. |
| What government programs are essentially examples of public theft? | Relief, welfare, Social Security, Medicare, Medicaid, food stamps, subsidies, loans, grants, entitlement, insurance, minimum wages, foreign aid, Federal aid to education, public housing, projects, small business loans, and many other names. |
| Property | A thing or things belonging to someone; possessions collectively. |
| Quid Pro Quo | A favor or advantage granted or expected in return for something. |
| Charity | The voluntary giving of help, typically in the form of money, to those in need. |
| Specialization | Is the basis of global trade as few countries produce enough goods to be completely self-sufficient. |
| Division of Labor | The assignment of different parts of a manufacturing process or task to different people in order to improve efficiency. |
| Market | The place where exchanges are made. |
| Auction | A public sale in which goods or property are sold to the highest bidder. |
| Want | Covers a multitude of desires, calculations, expectations, needs, and so on. |
| Barter | Exchange (goods or services) for other goods or services without using money. |
| Direct Exchange | Occurs when goods are directly exchanged for goods as in barter. |
| Indirect Exchange | Occurs when the exchange is made through some medium of exchange, as in money. Indirect exchange is distinctive between buyer and seller is made; the buyer is the one who tenders money and the seller tenders goods in the exchange. |
| Medium of Exchange | Permits the value of goods to be assessed and rendered in terms of the intermediary, most often, a form of money widely accepted to buy any other good. |
| Redistribution | Distributing again; "the revolution resulted in a redistribution of wealth" |
| Comparative Advantage | This advantage exists when someone or something has a lower cost of [production when compared to someone or something else. |
| Why do some people believe that there is a shortage of money? What is wrong with this belief? | money comes to be thought as demand. This gives the illusion that there is a money shortage. The result is to cheapen the money, the problem is a shortage of goods, which is what people want, and the solution, is the production of goods, not money. |
| Why was gold and silver favored above other commodities as money? Does Gresham's law apply to this historical development? | The worthless paper money is legal tender for all debts, public and private. Who would choose to pay a debt in gold instead of paper money.Hamilton got Congress to authorize the minting of both gold and silver coins at a ratio of 1 to 15. |
| What is fractional reserve banking?137 | Fractional reserve banking is the practices of keeping only a fraction of its deposits on hand to redeem the claims against them, the size of the fraction whether 90% or 20% does not alter the character of the practice. |
| What is really meant by the following statement: “There is no such thing as paper money…” 133 | Any more than there is such as thing as a paper horse, paper potato, paper rose, paper man, or paper any other commodity, except paper paper, which is clearly a redundancy. |
| What were the three great paper money inflations of the 18th century, and what can be learned from them? | 1. French inflation and was the most extensive and devastating inflation of any country in Europe. 2. American War for Independence. 3. French Revolution and compared to the others tried to make it appear that the paper money was backed by land. |
| Money | primary function is to serve as a medium of exchange, a standard of calculation, and as a store of wealth. |
| Commodity | a raw material or primary agricultural product that can be bought and sold, such as copper or coffee. |
| Currency | consisting of paper bills and vase metals, plus credit, and is based so far as it is based on anything, on debt. |
| Medium of exchange | is an intermediary used in trade to avoid the inconveniences of a pure barter system. |
| J.B. Say | French Economist emphasized that goods are ultimately exchanged for other goods. |
| Say‘s Law | That there can never be general overproduction in a society or civilization, so long as there are unmet wants and people are left free to trade voluntarily amongst themselves. |
| Shortage of money | Recurrent illusion |
| Pricing function of money | Standard in making calculations or the reducing of the value of a thing to a price. |
| Net worth | a listing of one’s assets subtracted from liabilities to get a total |
| Assets | What one owns |
| Liabilities | What one owes |
| Liquidity preference | sometimes referred to as a preference for cash holding |
| Counterfeit | made in exact imitation of something valuable or important with the intention to deceive or defraud. |
| Bimetallic | made or consisting of two metals. |
| Sir Thomas Gresham | English financer in 16th century became known for Gresham’s Law. |
| Gresham‘s Law | bad money tends to drive good money out of circulation. |
| Legal tender | coins or banknotes that must be accepted if offered in payment of a debt. |
| Thaler | the dollar was the corruption of a word used in Germany and central Europe for a coin consisting of an ounce of silver. |
| Paper money | strictly speaking there is no such thing, however it will be treated as money here, as noted before, but with considerable misgivings. |
| Debt money | referred to this from paper money |
| Fiat money | a kind of debt money issued to which promises to pay no commodity or anything else. |
| Great Khan | of China who had a system fiat money or paper money made from bark of the mulberry tree as recorded by Marco Polo in the 13th century. |
| Bill of exchange | is a paper on which the receiver or buyer of something of value promises to pay a certain sum of money, either upon demand or at some specified maturity date. |
| Warehouse receipts | was much more closely tied to banking than the bill of exchange. Forerunner for fractional reserve banking, a bank simply issued a receipt for gold or silver deposited there, and paid out the money on the demand of the owner. |
| Fractional reserve banking | the practices of keeping only a fraction of its deposits on hand to redeem the claims against them, The size of the fraction whether 90% or 20% does not alter the character of the practice. |
| Bank of issue | is a bank which issues currency, commonly called bank notes. |
| Commercial bank | or checking account is simply a bank which accepts deposits, cashes checks, and makes loans from those deposits. |
| Fiduciary | are permitted to treat a depositor’s money in many respects as if it were their own. |
| Inflation | an increase of the money supply, by debasing or devaluing the money supply. |
| Clipped coins | schemes by inflationist carried out in the 18th century by monarchs and other banking activities. |
| Federal Reserve Act | established the Federal Reserve System in 1913. |
| Federal Reserve System | means for setting up a “flexible” money system in the country, a system which could increase or decrease the money supply according to the commercial and agricultural needs of the country. Essentially the U.S.’s Central Bank |
| Commercial paper | short-term unsecured promissory notes issued by companies. |
| Government bonds | issued by a national government, generally with a promise to pay periodic interest payments and to repay the face value on the maturity date. Government bonds are usually denominated in the country's own currency. |
| Money multiplier | fractional reserve banking system, a unit of cash injected into system by a central bank increases as it propagates through banking system. Increase in the monetary base effects money supply & multiplicative effect is represented by the money multiplier. |
| Credit expansion | increased amount of debt money in circulation and provided an insubstantial basis for greatly increasing this credit by banks. |
| Boom/bust | Easy money policy and credit expansion gives rise to a boom that must necessarily bust in the future. |
| Time preference | All people have ends and all people prefer to accomplish their ends sooner than later. |
| What is the “Usury Myth”? | Believing that working with money is inherently immoral or that charging interest on money is always exploitive |
| Discuss Weber’s argument that Christianity gave birth to capitalism. | Calvinism developed, a need for whether one was saved, Calvinists looked to success in worldly activity for clues. They came to value profit & material success as signs of God's favor. Weber argued this new attitude paved the way for modern capitalism. |
| What is the “Piety Myth”? Describe how it leads well-meaning Christians to reject capitalism. | Focusing on our good intentions rather than on the unintended consequences of our actions |
| What does Bauman say are the 5 Steps we must take to truly help the poor? | 1Welfare in the hands of contributors, not recipients or bureaucrats. 2Redefine poverty 3Re-educate the politicians and the poor.4No perfect solutions are possible. 5Abundance can be wrenched from scarcity following the Golden Rule |
| What makes something valuable? | By the market on the basis of supply and demand. |
| Market | generalized or abstract concept- best to think of the market as simply a process by which people achieve their individual economic ends. |
| Just price | written about by medieval philosophers when prices one in which the things exchanged had some sort of equality of worth or value. |
| Natural price | thought of by Adam Smith that it is indistinct from the cost of production. Many people agree that cost of production is a kind of natural price. |
| Equilibrium price | price at which supply and demand converge on the market so as to clear the market of goods for sale and satisfy the demands for them. |
| Price in a free market | is the amount that a willing seller will take and a willing buyer will pay. |
| Going price | for particular goods and services |
| Loss leader | to draw customers into the store and that alone often plays havoc with the going price, at least briefly. |
| Ceteris paribus | all other things being equal. |
| Supply | of a good to be the various amounts of the goods that would be offered for sale in the market at various prices, other things being equal. |
| Demand | relationship of prices and the various quantities that people would desire to purchase in the market per unit of time, ceteris paribus. |
| General rules of supply and demand | a. If the demand for the some increases and the supply remains the same, the price will rise. b. If the demand remains the same the supply increases, the price will decline. |
| Elasticity | elastic demand is one in which there is a sharp response to increase or decrease in price. |
| Competition | the balance wheel of the market. It provides the spur to efficiency by weeding out the inefficient producers. |
| Wages | and salaries are prices of labor, work, services, or whatever, and need not have been discussed separate from the discussion of determination of prices of goods. Except for the fact they have for nearly fifty years been treated differently. |
| Clayton Anti-trust Act- | (1914) labor of a human being is not a commodity or article of commerce. Making a distinction between labor and other sorts of goods. |
| Protective tariff | associated with mercantilism to keep foreign goods out of a country, which are in competition with domestic produce. In economic terms, it is an attempt to keep foreign competitors off the domestic market. |
| Fallacy of composition | promotes the special interest of some while undermining the general welfare of the populace. |
| Labor union | to raise the price of labor of its members, and sometimes more broadly, those within a craft, trade, profession, or even a whole industry. |
| Surplus of labor | fatal misconception of Unionists that a surplus of labor will have a surplus of goods. |
| Productivity | the state or quality of producing something, esp. crops. |
| Bullionist | way for a nation to become wealthy was to have an increase of precious metals in foreign trade. |
| Minimum wage | Government intervened in the market by setting this minimum wage. |
| Price floor | the situation of where the government has decreed that the price of some good in question should be set above its current going price. |
| Collective bargaining | negotiation of wages and other conditions of employment by an organized body of employees. |
| National Labor Relations Board | holds hearings on labor disputes and makes what is called administrative law by its decesions. |
| Fair Labor Standards Act (1938) | prescribed minimum wages and maximum hours covered industries. Initially wage was set at 25 cent per hour. |
| OSHA | Occupational Safety and Health Administration- ensures safe and healthy working conditions for Americans by enforcing standards and providing workplace safety training. |
| Price ceiling | Government restrictions keeping the price of a good below its going price; results in a shortage of the good. |
| Fringe benefits | includes paid vacation periods, health and hospitalization insurance, sick leave, retirement plans, and the like, paid for in whole or in part by employers. |
| Technological unemployment | side effect of higher than market wages. |
| Black market | goods in great demand could be purchased in larger quantities. These illegal markets arise because there are always customers willing to pay a much higher price than the legal price to obtain the desired good. |
| Rent controls | pernicious variety of price controls, because they have sometimes been continued long after the wars that were made the occasion for them. |
| Living wage | make enough money so that they can live well. Tried to be achieved through minimum wage laws that replace cooperation with coercion. The people suffer from these laws are those at the bottom: the unskilled, young, inarticulate, and handicapped. |
| Fair trade | famers paid twice market price, based on an estimate of how much they need to enjoy a decent standard of living. Paying these high prices encourages poor farmers to enter or stay in the coffee market when it’s against their long-term interest to do so. |
| Foreign aid | The end of poverty will come as a result of homegrown political and economic reforms, not through outside aid. The biggest hope for the world’s poor nation is not Bono, it is the citizens of poor nations themselves. |
| Circle of responsibility | responsibility overlapping circles or jurisdictions. The person or group with the narrowest jurisdiction has most knowledge and the most responsibility. Unless something bad happens my responsibility for all these things should match my knowledge. |
| Government run welfare | There have been improvements from this system, but Christians never think that it is the government’s primary responsibility towards helping the poor. |
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bmrolan
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