Economics

Answer the following questions. Post your answers in a word doc. on Moodle

1. List the 5 Factors of Production and define each.

Land: (Natural Resources) All the stuff provide naturally and find on, in, and under the land. Example: Water, Natural gas, Oil, Trees

Labor: (Manpower) Is the physical and mental effort of people use to produce goods and services.

Capital: The resources we use to make things. (Human capital is brainpower, ideas, innovation.) Example: Tools, Machinery, Factories

Entrepreneurship: Investment (Money). (Investing time, natural resources, labor and capital are all risks associated with production.)

Human Capital: Is the knowledge and skills acquired by a worker through education and experience. (Every job requires some human capital.)

2. What is the difference between Micro and Macro Economics?

Microeconomics is the study of particular markets, and segments of the economy. Macroeconomics is the study of the whole economy.

Macroeconomics is concerned with current output, long-run economic growth, economic fluctuations, unemployment, inflation and the effect of increasing globalization upon domestic output.

Microeconomics by contrast, analyzes household and firm behavior to understand the determinants of price and output in individual markets.

3. Name and explain the two economic schools of thought.

Free-market economists believe the market mechanism is the best way to allocate resources.

Keynesian economists believe in government intervention to ‘correct’ the economy.

4. What did Keynes believe was necessary to solve the economic problems of the time?

Keynes believe that was necessary the intervention of the government to secure a strong and stable economy. Keynes argued that aggregate demand determined the overall level of economic activity, and that inadequate aggregate demand could lead to prolonged periods of high unemployment. He advocated the use of fiscal and monetary measures to mitigate the adverse effects...