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 Federal Reserve. Show all posts
Showing posts with label Federal Reserve. Show all posts

Wednesday, September 29, 2010

The World's Most Profitable Bank

Click the title above to access a great article on the Federal Reserve. It explains the primary functions of the institution as a fiscal agent for the government and just how lucrative they can be. The article also offers perspective to the unique depth of this latest crisis.

Sunday, August 15, 2010

Let's Avoid The Next Crisis, Ok?

Three major economists weigh in on what the Fed can do in the future to head off trouble before it multplies.

Friday, July 16, 2010

In Plain English

Click on the link above and you'll access a video production from the Fed that effectively illustrates the functions of the central bank. This used to only be available in hard copy DVD, but this is a much more convenient way to offer the content.