Unit 1: The Nature of Economics and the Economy

Unit 1 - The Nature of Economics and the Economy

Chapter 1 - Basic Principles

Key Concept

In the textbook the definition of economics is that "[it]'s the study of the way we make decision about the use of scarce resources." In addition, the word "Economics" was derived from two greek words.

1. "Oikos" - means "House"
2. "Nemo" - means "Manage"
3. "Oikonomia" - which means that "matters relating to house management"

The reading of "Xenophon Oeconomicus" greatly altered my perspective of how I thought economics first started. The text discussed ways to manage materials at hand, the estate, workers/slaves, productivity and etc to ensure everything was operating efficiently. Furthermore, the first chapter touched on the ideas of opportunity cost and the different fallacies that are false but are still accepted by many people in society. 

Chapter 2 - Productive Resources and Economic Systems

Key Concept

The Different Political and economic systems are presented in the second chapter. To the left, is a chart comparing all of the different political economies. Additionally, the different political systems are ranked based on a scale which is below. This concept/topic in chapter two, certainly organized the timeline of capitalism as well as other economies. Despite, the many different characteristics of each economic system they all had one goal, which was to better economic growth.

Chapter 3 - The Evolution of Economic Thought

Key Concept

          Chapter 3 consisted of the different economic thinkers that brought different ideas of how they felt the economic system should operate and why. For me, one of the economic thinkers that I felt was most influential was Friedrich Von Hayek. Hayek believed in free markets, with little government involvement and was against collectivism. He felt that with too much government involvement it will lead to totalitarianism and collectivism will lead to socialism and communism. Hayek also supported privatization, believed that businesses should be motivated by profit and supported the government taking steps to care for the country's population. His theories were neglected for much of the 20th century until the early 80s when 30 years of prosperous economic growth ended. Hayek's theories were then adopted from that point on and helped establish the capitalism society we have today without too much regulation. 

Unit 1 - Reflection

The first three chapters of the book were very essential as these concepts helped base the theories and the history of the concepts in further chapters. The early history of economics was very fascinating as it completely differed from my assumption of how economics would've came to be. Learning the history of economics, has allowed me to depict and understand a small portion as to how the world was prior to today's in both political and economic systems.