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.



Showing posts with label Economic Growth. Show all posts
Showing posts with label Economic Growth. Show all posts

Friday, September 10, 2010

Does The Hangover Make The Party Worthwhile?


Some states seem to be emerging slowly from the nation's economic funk. But three states, California, Michigan and Florida apparently over-indulged. The key to the sustained hangover gripping these states can be found in analyzing the evidence supporting the theory that the bigger you are the harder you fall. Click on the title above to access the article.

Friday, July 2, 2010

Too Early To Pull-back?

Paul Krugman bemoans the movement toward austerity among the world's legislators before the global economy recovers.

Thursday, July 1, 2010

Latin America Surges As Most Of The World Flounders


A combination of pragmatism and a blooming relationship with Asia has allowed many Latin American economies to buck the trend currently plaguing the developed world. The article points out lessons that the U.S. should have adopted in retrospect such as, when the going is good....save!!!