Questions to topics 1 st year/summer

1. Economics. The History of Economics

1. What explanation did Enlightenment scholars find to the question why most people were poor? What did it lead to? (the nature of land ownership, development of human knowledge, information expansion, the need to categorize and classify the information received and thus the division of philosophy into science and philosophy with later division of science into economics, political science, history etc.)

2. Who was the first scientist to codify many of the ideas how the economic system worked? Was he an economist? What was his book called? (Adam Smith, the book – The Wealth of Nations, he could be called both anthropologist and philosopher as at that time the economics wasn’t developed yet)

3. When did economics start developing as a sub discipline? (at the end of the 19^th century)

4. Name some of the classical economist.

5. Who is considered to be the farther of neo-classical economics? What is his main book? What questions did he focus in his book on? (Alfred Marshal, principles of Economics, focused on the questions that could be asked in the graphical supply-demand framework)

6. What other names (schools, theories) can you give?

7. Define economics. (the study of the way in which mankind organize itself to solve the basic problem of scarcity)

8. Why are economies becoming more complex every year? (due to the increase of participants on the global market, complex financial and production systems, etc)

9. Explain: “All societies have more wants than resources”. What wants and what resources do they have? (natural, human (skill mix), wants cover both essentials and luxuries and due to the lack of certain resources and surplus of the others a nation has to specialize)

10. Differentiate between macroeconomics and microeconomics and explain their interdependency. (micro – behavior of individual units within the economy(availability of labour and its costs, availability of raw materials, taxes, state of the economy) macro – economy as a whole, factors that determine growth and fluctuations in output, employment, and the level of prices (culture, political forces, economic system, technology, skill mix, the consumers)

11. Why are specialists in macroeconomics particularly interested in understanding those factors that determine inflation, unemployment and growth? (basic goals of each nation as its development and wealth depends on their accomplishment)

2. System. The Economic System

1. What idea does the word “system” convey? Define the word “system”. (an organized complex whole, an assemblage or combination of things or parts performing as a complex or unitary whole)

2. Prove that we live in the world of systems.

3. What are the main concepts of a system? What do they imply? (the concepts of interdependency, wholism and synergism imply that the parts interact with each other and this interaction secures the existence and smooth operation of a system)

4. Why is it important to use systematic approach to everything that you hear, see, read or discuss? Are you used to applying it?

5. Why do we view organization as open systems? (depend on its environment and affects the environment)

6. Can you give any examples of closed systems? What do you consider to be a closed system?(former Soviet Union ,the one which is closed to the influence of outer forcers)

7. What is “economic system”? (the system that society uses for allocation and distribution of scarce resources)

8. What are the main forms of economic order? Differentiate between private enterprise and controlled economies. (controlled economies depend on centralized decisions and thus are very slow in adjusting to the environmental changes, private – more flexible, profit oriented(can’t exist without profit), liable for their debts, the function of resource allocation is performed by the price mechanism, etc.)

9. Explain the principle of the “invisible hand”.(each person pursue his self-interest without interference of the government , will be lead by the laws of supply and demand, as if by an invisible hand, to achieve the best good for himself and for society as well)

10. What is meant by the notion of economic man? (holds that each person is motivated by economic forces, i.e. each person will always attempt to achieve the greatest amount of satisfaction for the least amount of sacrifice, rational decisions are those that depend on the balance of efforts and possible benefits)

11. What functions does economic order perform? (means of resource allocation, means of employment regulation, the basics of distribution system)

12. What do economic goals for a nation usually include? Explain them. (price stability, full employment, economic growth, equitable distribution of income)

13. Explain “laissez-faire”. (non-interference of the government into the economic matters)