Ten Key Principles of Economics

1. Everything has a cost. There is no free lunch. There is always a trade-off.
2. Cost is what you give up to get something. In particular, opportunity cost is cost of the tradeoff.
3. One More. Rational people make decisions on the basis of the cost of one more unit (of consumption, of investment, of labor hour, etc.).
4. Incentives work. People respond to incentives.
5. Open for trade. Trade can make all parties better off.
6. Markets Rock! Usually, markets are the best way to allocate scarce resources between producers and consumers.
7. Intervention in free markets is sometimes needed. (But watch out for the law of unintended effects!)
8. Concentrate on productivity. A country’s standard of living depends on how productive its economy is.
9. Sloshing in money leads to higher prices. Inflation is caused by excessive money supply.!!
10. Caution: In the short run, falling prices may lead to unemployment, and rising employment may lead to inflation.



Wednesday, November 10, 2010

A Return To The Gold Standard?


The head of the World Bank intimated his support for a return to some form of gold standard the other day. In the wake of a flood of money in the global economy and the seemingly reckless fiscal policies of many nations, there is a call for the bygone safety he perceives in gold. Click on the link to access five economists sounding off on the prospect of this move.
Posted by at
Labels: , ,

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)