Introduction to Economics

What is Economics?

• Economics is a social science that studies how individual, Businesses and Government use their scarce resources to satisfy unlimited wants

• The value of the best alternative forgone in making any choice. It involves sacrificing  something  in  order  to  gain  something  else.

• is an objective statement of fact

•  The state in which the resources available are insufficient to satisfy people’s wants. In other words, a state of unlimited wants and limited resources.

Identify the three major flows in the economy

• Income, spending and stock variable

• flow, stock and income

• Total Production, Total income and Total spending

• Total production, total spending and total savings

The distinction between a flow and a stock is that

• A flow measures monetary values, while a stock measures real values, such as factory output

• A flow measures an account on a monthly basis, while a stock measures it on an annual basis;

• A flow measures value in nominal terms, while a stock measures it in real terms;

• A flow measures a quantity over a period of time, while a stock measures a quantity at a specific moment

Which of the following represent injections into the circular flow of income and spending?

• Exports and investment;

• Government spending and imports;

• Government spending and saving

• Imports and saving

State the main objectives that are used to measure the economy

• production , income and spending

• Economic growth, Full employment, price stability, Balance of payment stability, equitable distribution of income

• inflation, gross domestic product , real GDP

• Consumer price index, Produce price index and inflarion