Chapter 4 notes - -Economic activities are embedded in...

-Economic activities are embedded in political, social, cultural, and historical contexts.
How is Economics Defined?
According to Alfred Marshal, economics is the social science that studies, describes, models, and
makes projections about flows of wealth in the process of the production, distribution, and
consumption of scarce resources . A more contemporary definition might be the social scientific
study of the choices made by individuals that alternative uses of scarce resources to satisfy needs
and wants.
In liberal economics, all rational individuals seek to maximize utility by expending the least
energy (or costs) to satisfy a need.
Mercantilism and Nationalism
-Mercantilism is a theory of political economy that holds that the economy well-being of a nation
is directly related to its control over the global volume of capital.
-Economic nationalism refers to policies that are guided by the protection, and wealth
accumulation.
-The role of government is to enhance a positive balance of trade by enforcing protectionist
policies such as tariffs on imported goods, creating subsidies to protect businesses from risks,
and imposes import quotas to prevent other nations from dumping cheap products on the national
markets.
-There is a central idea in economic nationalism that the interests of the state are inherently tried
to economic activity and that economic activity itself is subordinate to national interest.
-Not surprisingly, economic nationalism tends to rise when there is concentration of wealth in the
hands of increasingly few people.