Download - Economics ABC Book
Economics ABC BookBy: Fahad Almojel
Honey Bees and The RPG’s
AssumptionsAn economist was making decisions about how much more honey to produce given the information he received that hundreds more bears were coming to town. He made an Assumption in his calculations that his information was accurate and so he traveled to see the bee keeper to prepare for this event.
A
Balance of Payments
The total of all the money coming into a country from abroad less all of the money going out of the country during the same period
B
Ceteris Paribus
As the Economist was making his assumption, he claimed that every thing is in Ceteris Paribus, from which he made his calculations which resulted accurately
C
Demand
The bears had high Demand for honey, so more honey was produced.
D
Expectations
The Economist made some calculations, and based on what he figured out, he had Expectations that the bears will soon not just finish all the honey that’s in the town, they’ll go crazy and also eat the people that live there and ruin the economy.
E
Foreign Direct Investment
So a successful business man suggested to buy a company that is overseas, which is dominant in producing powerful Rocket-Propelled Grenade’s (RPG’s) to blow away all the bears that are taking over the town.
F
GDP
Unfortunately, the GDP (Gross Domestic Product) rate, or the measure of economic activity in a country, started to drop because of the decrease in economic activity due to the death of many people in that town.
G
Hard Currency
Luckily, this country had a reserve of Hard Currency, like the euro, which made its economy more sustain.
H
Inflation
As a consequence of the bears eating all the honey in town, they had to import a large amount of honey, which high demand pulled the price up, or caused Inflation in the price of honey.
I
Joint Stock CompanyThe business man’s RPG company worked out successfully and exported a large number of RPG’s to that town to deal with the bears. The guy liked owning business in the RPG production industry, so he transferred his company into a Joint Stock Company in order to make it more profitable. This means many people purchased shares of the business and shared its risks and profits.
J
Keynesian
After the incident happened, the government were being aware of corporations and private sectors in order for them not to make the incident happen again, so the government took in control and supervised activities.
K
Labor
Due to the destruction that happened in the town, laborers were required to do some Labor work to re-build the infrastructure.
L
Model
After all the chaos that was been going on, the Economist collected lots of data and statistics in order to make a Model that explains the current situation of the town after the attack.
M
Nationalization
In fear of the business man’s RPG’s dominant company, the foreign country Nationalized it and had it under control.
N
Opportunity Costs
In order to make it a fair game, the government gave the business man the Opportunity Costs of the company.
O
Price
Prices of honey started to go down as before. It changed from $6.00 per jar, to $4.50 per jar.
P
Quartile Part of the “ile” family that signposts positions
on a scale of numbers
Q
Recession
At that period where lots of the town’s citizen’s were killed, no one could do their jobs, so the country started going through Recession.
R
Scarcity
During the bear attacks, the town was suffering from honey Scarcity, or lack of honey in other word.
S
Trade-Offs
The Trade-Off, or compromise that was being done between honey and RPG’s made people feel safer.
T
Utility
The Economist suggested to increase the utility of the RPG’s in order to be prepared for any bear attacks in the future.
U
Value
Ever since then, honey had a high Value and every one appreciated the existence of it.
V
Well - Being
Applying the suggestions that were discussed in the Economist’s model, the whole town became in a state of Well-Being.
j
W
X - efficiency Producing output at the minimum possible cost
X
Yield
The Stocks which shareholders bought from that RPG company had a high Yield rate, or were more secure, because of the high demand that that people had for RPG’s which made it successful.
Y
Zero-Sum Game
And as for the business man, he created a new company in the RPG production industry, but it wasn’t as profitable as his old one, and it also wasn’t losing, it was a Zero-Sum Game.
Z
The End …
Index Assumptions: Something you expect – without proof, something accepted as true
without any real basis Balance of Payments: The total of all the money coming into a country from abroad
less all of the money going out of the country during the same period Ceteris Paribus: with other conditions remaining the same, Other things being equal Demand: A desire or request for a certain good or service Expectations: Strong belief that something will happen or be the case in the future,
they can be based on truths or assumptions. Foreign Direct Investment: Investing directly in production in another country,
either by buying a company there or establishing new operations of an existing business.
GDP: Gross domestic product, a measure of economic activity in a country Hard Currency: Money you can trust. A hard currency is expected to retain its value Inflation: Rising prices, across the board. Joint Stock Company: a company whose stock is owned jointly by the shareholders Keynesian: A branch of economics, based, often loosely, on the ideas of Keynes,
characterized by a belief in active government and suspicion of market outcomes. Labor: One of the factors of production, with land, capital and enterprise.
Model: An imitation, a prototype, a blueprint to follow, an explanation of reality, a theory
Nationalization: When a government takes ownership of a private-sector business
Opportunity Costs: The true cost of something is what you give up to get it. Price: The price charged for something depends on the tastes income and
elasticity of demand of customers. Quartile: Part of the “ile” family that signposts positions on a scale of numbers Recession: a period of slow or negative economic growth, usually accompanied
by rising unemployment Scarcity: Insufficient for demand, lack of something, a few of something Trade-Offs: A balanced achieved two desirable but incompatible features; a
compromise. Utility: The state of being useful, profitable, or beneficial Value: the material on monetary worth of something Well-Being: the state of being comfortable, healthy, or happy X-Efficiency: Producing output at the minimum possible cost Yield: The annual income from a security, expressed as a percentage of the
current market price of the security. Zero-Sum Game: When the gains made by winners in an economic transaction
equal the losses suffered by the losers
Citations
http://www.economicswebinstitute.org/concepts.htm
http://www.economist.com/research/economics/