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I have a list of 15 terms and I need to write a 2-3 page paper on 8-9 terms/topics listed on the paper out of the 15 explaining how they apply to my life.

I have also attached the key terms.

Fifteen (15) Salient Principles in Economics & Finance:
1) “No Such Thing as a “Free Lunch” – The cost of something is defined as what you give
up to get it ! Basic Economics principle is: OPPORTUNITY COSTS.
2) Learn from history when defining / describing economic behaviors assessing both
intended and un-intended consequences of public policy.
3) All entities (people, governments, firms, consumers, society) encounter “trade-offs”;
Exists both INTENDED AND UNINTENDED CONSEQUENCES of economic policies;
4) Rational firms make rational decisions and think at the “margin” defined as
incremental marginal analysis; Definition of marginal change: A small incremental
adjustment to a plan of action,.
Two (2) examples:
i)
Why is water (generally speaking) so cheap versus diamonds so expensive?
The marginal benefit of a good or service depends on how many units a person
already has. Because water is so plentiful, the marginal benefit of an additional cup
of water is small. Conversely, since diamonds are rare (scarcity), the marginal
benefit of an extra diamond is high;
ii) Suppose you are considering calling a friend on your cell phone and the marginal
benefit of the 10 minute call is $7.00. Your cell phone costs you $40 per month plus an
additional $.50 per minute. You typically talk for 100 minutes and have a monthly bill of
$90. If you consider the average cost of the call, you would decide that the benefit of this 10
minute call does not exceed its costs ($9.00).
However, the marginal cost of the call is only $5.00 so the marginal benefit of the call does
outweigh its marginal cost. Cell phone users who have unlimited minutes (free at the
margin) often make long and frivolous calls.
5) Entities and people respond to incentives better than penalties;
6) Markets are usually the preferred way to organize / assimilate economic activities;
7) Acting and performing in one’s direct, “Self Interest” best supports society’s overall
needs / interests; See reference to Adam Smith, Wealth of Nations, 1776 !
8) Government (Federal, State & Local) can sometimes improves market outcomes and the
impacts of externalities (“third party effects”); Beware of both intended and un-intended
consequences to society as a result of government public policy!
9) A country’s standard of living (wealth accumulation and distribution) depends on it’s
ability to produce goods and services and prioritizing needs and wants given finite
resources (land, labor, capital, management expertise). Concept is worker & capital
productivity !
10) Prices rise (inflate) when governments print to much money, and when taxes are levied
causing output to diminish and prices to rise. Inflation drives the “real” purchasing power
of the currency down, which acts as a direct, regressive tax on those who have the least.
Inflation also reduces the “real rate of return” on invested financial capital and creates a
disincentive for savers…..
11) In the short run, there may exist trade-offs between inflation and unemployment; Will
discuss short-run versus long-run behaviors.
12) “Equality of opportunity does not mean Equality of Outcome” ! Equality of outcome is
antithesis to a market driven economy. Hard work, discipline, transparency, accountability
and knowledge ultimately drives opportunity and success.
13). Creation of wealth & risk undertaking: Focus on private property rights including
private ownership of the factors of production which generate factors of income. Private
property rights drives wealth creation, vested ownership rights (equity), and conservation.
14) ‘TESDBOY’: Exists direct tax impacts (correlations) among the various concepts in
society: T = Taxes, E = Elasticity (Degrees of Consumer & Business Sensitivity to Price
Changes), S = Shifting (Forward or Backward; Or Some “%”), D = Deadweight Loss
(Market Inefficiency), B = Behaviors & O = Outcomes (Macro, Micro & Financial) = “Y” =
➔ GDP & Nation’s Income.
15): Financial capital & capital in general is dynamic, in motion 24 / 7, throughout the
world. Capital including (yes, labor) migrates to those regions of the world (hence
“markets”), where the actual “real” rate of return (net of inflation / deflation, currency
appreciation / depreciation, regulation / capital controls, taxation & sustainability) is the
highest.
Goal is to have interactive “team-based” discussions and projects relevant to the “real
world” learning about economic & financial markets. Associated with the class, will
encourage (if requested) “live” or digital meetings with all of you. In our meetings, we will
collectively discuss progress, efforts and feedback / perspectives.
Enjoy the class ! Always here to best support you and your career ambitions.
Again, meetings (1:1) can be useful in supporting our common UCONN / MBA goals.
Ken Goroshko
Cell: 860.212.4905

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