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Economics. Essay

1719 words - 7 pages

Modern Economics.Modern economics vs. political economy, as it used to be called-dates back to1776. It begins with the American Revolution. A man named Adam Smith, a Scottish philosopher, published a book called Smith's work is considered the first example of modern economics. In some places Smith is most famous for suggesting that business always try to monopolize markets and raise prices. Economists credit Adam Smith theory of the invisible hand - the idea that a market economy will operate so that no one can be made better off without making someone else worse off. It is as if an invisible hand is guiding the markets when in reality the markets merely reflect the activities of those trading in them.Economics didn't actually start with Smith. Prices and economics were discussed long before Smith appeared. St. Augustine considered what a just price is. When prices for some widely consumed good or service surge or when some company s profits appear to reach stratospheric levels, the popular press seems to return to St. Augustine and ask what is the just price. Others maintain that economics began much, much earlier. Economics figures in most national elections. In 1992 Bill Clinton s unofficial slogan was it s the Economy, Stupid In 1984 Ronald Reagan based his reelection on a simple question: Are you better off than you were four years ago Both approaches struck a responsive chord and both men were elected. Examples extend to almost every presidential campaign. John Kennedy was elected during the recession that plagued the prior administration; the recession ended in the second moth of Kennedy s term as he demonstrated a combination of timing and luck matched by few Presidents. Franklin D. Roosevelt s landslide victory in 1936-based on his efforts to turn back the Great Depression- set the course for the next several decades of U.S. politics. The economy is telling us what s happening and what could happen next. To understand the economy you have to look at how the economy is measured, scaled, and gauged. How big, rich fast growing it is. The economy in the United States and increasingly throughout the world is organized into markets. Markets are where we trade things- someone s labor, time and effort for his wage; or hard-earned dollars for a car.Markets are rather old-maybe as old as civilization itself. Markets are crucial to understanding the economy. They include much more than the stock market, although that one is quite interesting. Markets exist for almost anything-time and labor, art, cars, things we make, services we buy. Most markets have common elements, patterns that make buying a car and getting a second opinion before surgery almost the same thing. As the axiom goes, the only constant is change. In the economy, changes occur all the time. They are what shift prices ad gives raise to opportunities.What is economics it is explained as the allocation of scarce resources, or production, distribution, and stability? Economics is the...

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