World Economic Growth Pattern

Introduction to Basic Economic Concepts & World Economic Growth Pattern

1. World Economic Growth Pattern

2. What Economics really is? Economics is the study of people and choices. Alfred Marsh defined Economics as: “The Study of Man & Woman in the ordinary business of life. It enquires how he gets his income and how he uses it. Thus it is on one side, the study of wealth, and on the other m ore important side, the study of Man & Woman.”

3. Basic Assumptions in Economics Scarcity Opportunity Cost Everything has a cost Incentives

4. Two Divisions of Economics Micro-Economics Macro-Economics

5. Micro-Economics Study of Individual actors; firms, people, households. Actors make decisions/allocations of scarce resources (time, money, labor, food, water) and how do those actions affect prices and markets . Philosophy of people of decision-making . How many people should be hired to maximize the profit? If the competitor releases a product in MAY, what’s the best time to release our product? Which is better at fighting Climate Change, a Gas Tax or increasing fuel efficiency?

6. Macro-Economics Study of Economy as an aggregate. Policy related questions. Output, Inflation, Interest Rates, Government Spending & Growth. Will there be unemployment if there’s an increment in Taxes? Will an increase in money supply boost output or just increase inflation ? Macro-Economists predict the direction of overall economy and work for the government.

7. Specialization & Trade Adam Smith stated: “In every improved society, the farmer is generally nothing but a farmer, the manufacturer nothing but a manufacturer. The labor necessary to produce any one complete product i s almost always divided among a great number of hands.”

8. Specialization & Trade Individuals & Countries should specialize in producing things in which they have a Comparative A dvantage & then trade with other countries that specialize in something else. This trade is Mutually B eneficial . Most Economists agree that Specialization & Trade makes the world better off.

9. Economic System What to produce? Who will produce it? Who gets it?

10. Planned Economy Resources owned & managed by Government. No Consumer or Producer Sovereignty. Market forces not allowed to control prices. Profit not the main aim, instead the availability of goods & services to everyone is ensured. Government is the main decision-making body. Employment

11. Free-Market Economy Supply & Demand with little or no government control. Ownership of production. Private transactions between buyers and sellers. Umeployment Inequality in distribution of wealth. Firms control the prices in market.

12. Economic Development Based on 3 ingredients: Economic Growth Quality of Life Human Development Knowledge Economy Resources based Economy

13. Economic Growth Increase in the capacity of an economy to produce goods and services within a specific period of time. Long-term expansion in the productive potential of the economy to satisfy the wants of individuals in the society. Sustained economic growth has a positive impact on the national income and E mployment , which results in higher living standards . Enables government to earn extra income for further development of an economy. Economic growth can be achieved when the rate of increase in total output is greater than the rate of increase in population of a country. 

14. Factors that Affect Economic Growth Natural Resources Human Resources Capital Formation Technological Development Social & Political Factors Law

15. Gross Domestic Product (GDP) & Gross National Product (GNP) Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period . T otal value of everything produced by all the people and companies in the country. It doesn't matter if they are citizens or foreign-owned companies. If they are located within the country's boundaries, the government counts their production as GDP.

16. Gross National Income (GNI) It is the GDP plus net receipts from abroad of wages and salaries and of property income, plus net taxes and subsidies receivable from abroad. T he sum of all income earned while producing goods and services within a nation's borders.

17. Human Development Index (HDI) It is a statistical tool used to measure a country's overall achievement in its social and economic dimensions. Four Principal areas of examination are: Life Expectancy at birth. Mean years of schooling. Expected years of schooling. GNI per capita

18. Group Members Huzaifa Tahir Faraz Ali Junaid Ahmed Adnan Ahmed Ahsan Siddiqui