Question

you learned a variety of fundamental economic concepts. Identify two of the following principles, and apply them to the real-world situations, using at least 300 words. Also, provide discussions on how biblical principles are integrated into those principles. (Due: Day 4 by 11:59pm; word count: minimum 300 words)People face scarcity and costly trade-offsPeople engage in rational making and marginal thinkingPeople respond predictably to changes in incentivesSpecialization and trade can make everyone better offMarkets can improve economic efficiencyAppropriate government policies can improve market outcomesGovernment policies may help stabilize the economyIncreasing productivity leads to economic growth

Answer 1

Answer:

Government policies can help stabilize the economy.

Economic condition of any economy can be determined by determining its GDP and level of employment in the economy. Government policies like Fiscal or Monetary Policies can help stabilize the economy. If the economy is passing through recession,the expansionary monetary or fiscal policies can be implemented by the government. Government can reduce the CRR and Repo Rate and relaxes taxation policy so that more amount is left with the people to raise their living standards. On the other hand, at the time of prosperity,contractionary monetary or fiscal policies can be used . CRR and Repo Rate can be raised and tight taxation policy leave the public with less disposable income and thus their demands come down.

Increasing productivity leads to economic growth

Any economy stands on basically four pillars : GDP, Inflation, Employment and National Income.

As the productivity improves,the GDP of the economy grows.For higher level of production higher level of worker participation is required leading to higher level of employment. It will lead to higher supply of commodities and thus the price and inflation can be controlled. Higher level of employment also leads to higher level of National Income.Thus overall, the economic growth takes place.

Thus we can say that Increasing productivity leads to economic growth.