Summative assessment #1

1. Enumerate and discuss the goals of economy:

A. Economic growth – as a result of strong economic growth, the ability to manufacture goods
and services is increasing. It's unavoidable that as the world's population expands, so will the
production of goods and services.
B. Full employment – people who are ready to take responsibility must be able to find work.
When more people are employed, more merchandise and services are produced.
C. Economic efficiency - the term "economic efficiency" refers to a balance of loss and gain.
Economic efficiency refers to a state of affairs in which all available resources are utilized
effectively to benefit each individual or organization while eliminating inefficiencies.
D. Price level stability - price stability is a macroeconomic and financial goal aimed at promoting
long-term growth in the economy. The objective of the law is to keep inflation or deflation at a
minimum.
E. Economic freedom- each person's fundamental right to control his or her own job and
property is known as economic sovereignty. Individuals in a free economy are free to work,
develop, spend, and trade as they see fit. Economically free countries have a stronger economy
and a higher gdp growth.
F. Equitable distribution of income - equitable distribution of income ensures that benefits are
dispersed equally and that all participants of the industry have equal opportunities to accumulate
wealth.
G. Economic security - economic or financial security refers to the state of having a constant
income or other capabilities to maintain a standard of living today and in the conceivable future.
H. Balance of trade - . The balance of trade is a crucial component in determining a country's
trade balance. It assists economists and professionals in determining the economic stability of a
nation.

2. Differentiate microeconomics form macroeconomics?

- Microeconomics is the most fundamental level of economics, which focuses on the relationship
between supply, demand, and elasticity. Macroeconomics is the economy's stronger and broader
degree of operation. Though these two economic specialties appear to be separate, they are in
fact linked and mutual benefit.
3. Briefly state the division of economic activity
A. Production - the process of making money is referred to as "production." it is mostly
concerned with the development of utility. Production refers to all efforts that have been made to
create items that satisfy human aspirations. Property, labor, investment, entrepreneurship, and
foreign currency are the five production factors.
B. Exchange - the basic function of an exchange is to ensure fair and efficient trading as well as
effective transmission of pricing data for all securities exchange traded. To trade is to provide
something in return for something.
C. Consumption - - the discipline of primarily deals with how often money individuals and
corporations spend on goods and services is known as consumption. Both macroeconomics and
microeconomics benefit from studies on consumption behavior.
D. Distribution - the division of annual production, profit, or wealth between persons or
industrial components is referred to as distribution in economic.
4. Describe the different types of economic system.
- Traditional economies, centrally planned economies, mixed economies, and economic systems
are the four primary types of operating systems.
A. Command economic system- in communist countries the command entire economy, often
called as a planned system, is widely used since the government makes decision making.
B. Traditional economic system - the old economic system is based on well-defined patterns in
products, services, and labor.
C. Market economic system - in market economic systems, the idea of free markets is
fundamental. As a result, the government has a limited contribution to make. Resource control
by the government is very restricted, and it does not interfere with important economic activities.
D. Mixed economic system - mixed economic systems form an important part of market and
command economic systems. Consequently, mixed systems are sometimes called dual systems.
The Forms of capitalism:
A. Pure capitalism- pure capitalism is an independent, privatized economic system in which
private individuals plan, produce, and trade freely and without government intervention.
B. Modified capitalism - people cannot keep their profits in modified capitalism since there is
less government regulation.
C. Communism or command economy - . When it comes to the economy, communism seeks to
establish an equitable society by distributing ownership and management responsibilities for the
main means of production to the entire public.
D. Socialism - all legal processing and marketing decisions are made by the government in a
truly socialist society, and citizens depend on the state with everything from food to healthcare.
E. Mixed economy – it is private capitalists and governments play a key part in resolving
economic problems for the benefit of consumers, mixed economies have emerged. Because no
country has ever followed communism, socialism, or capitalism in its purest form
5. Explain the basic economic problems
Lack of resources creates a problem with decision-making. Due to individuals having unlimited
needs but limited resources to meet them, this situation is carried off. Scarcity refers to a
fundamental economic issue: the misalignment of limited resources with ostensibly limitless
needs. In this situation, people must make decisions on how to allocate resources efficiently in
order to cover basic needs as many additional wants as possible.