IB International Assessment Economics
Economic concepts are the ideologies that define economics. There are so many economic concepts but the most popular are: scarcity, opportunity cost, demand, supply and products. These concepts give an insight in what economics entails. In the case in question America is facing economic disputes as a result of passing trade agreements with three countries. The dispute revolves around these economic concepts. Scarcity is the inadequacy of the resources needs to satisfy consumer needs in comparison to the infinite needs. Opportunity cost is the act of foregoing an important want for a more prioritized want due to inability to satisfy all the wants with the available resources. Demand is the quantity that the consumers are capable and willing to purchase at a price in a certain period. Supply is the quantity the sellers are able and willing to bring in the market at a price at a time. In an attempt to make products available to the consumers at an affordable price, the American government passed agreements to eliminate sanctions for imports from South Korea, Panama and Colombia. This step was also aimed at improving the national income although it resulted to loss of employment to many as cheap imports are available to the consumers.
Economic model reflects the structural frameworks of the economic system. They are informed through economic, political and social theories. An economic model evolves over a period and differs across geographies and cultures. The US has researched with and incorporated varying economic models in the economy.
The portfolios explain the economy of various countries and how the various conditions improves or affect the economy of these countries. Considering the oil prices in Venezuela it is realized that the availability of producer substitutes and time affect the responsiveness of the supply quantity to changes in price given. When the period is short, firms find difficulties in controlling the manufacture of the goods thus making quantity supplied to become insensitive to price change thus inelastic. Later on new firms get to the seller. When manufactured goods have a lot of substitutes and has no or fewer substitutes, products can change the trend of production concerning to price changes.
The Marxist monetary model is founded on the sociopolitical and economic theories of the 19th century philosopher by the name Karl Marx. Karl proposed that, all human beings struggle can be grounded to the systems of and its uneven allocation of private affluences. The Marxist economic model seeks to rectify economic and social inequalities by the public abstraction of private properties. This model ropes public economy where the state manages and controls all property and wealth for the advantage of people instead of profits. The Marxist model of socialism eventually if established with respect to the Marx's design, it gives chance to a classless system referred as communism. In the current case it is evident that due to the country’s pursuit of profit many have lost their employment.
The Friedman model of economic is enthused by Friedman Milton E., who is a 20th century economist and promoted monetarism and the notion that, money supply must determine the ostensible value of outputs and dictate economic activities in the country. The Friedman model is focused on the idea that, there are stable relationships between the money supply and price inflation, and predominantly, that price fluctuation should be synchronized with monetary devaluation and that, price deflation must be synchronized with monetary inflations. This economic model favors private sectors over public sectors, and it objects to lower government waste by reducing funds which tax revenue accumulates. In support of this model, the American government passes the trade agreement to counteract inflation.
The model of Keynesian of economic is focused on the notions of 19th century, the English economist Keynes John Maynard. This model sponsors government manipulation by monetary policies action through central banks, the Federal Reserve, in the United States. The hands on fiscal legislation and high taxation supporting state subsidized economic project. Under this economics model, private sectors do exist, though it is highly regulated by governments and highly taxed to finance public projects. The economic Keynesian model was predominant mostly in the U S in the times of Great Depression, since President Franklin Roosevelt sought to expand the functions of federal governments in the economic affairs. President Barack Obama and George Bush revived Keynesian economics agenda through different government motivations program. In pursuit of this model the US government passed the trade agreements to check the private sector and counteract consumers’ exploitation.
The model of Smithian economic is focused to the 18th century Scottish economist and social philosopher Smith Adam. This model supports the policy of laissez-faire that proposes that, the imperceptible hands of the private markets instead of government’s interference must regulate the economy. This model limits the government’s role to permit for the formulation of private assets, promoting the notion that, under competition resources owners will utilize resources gainfully and profit all. The Fiscal conservative who wants to curtail state inefficiency and waste support economic theories of Smith. This model describes the reason for the problems that arose from the trade agreements.