Margaret Dempsey ECON 422 Assignment 1 January 22, 2008
The first benefit from dealing with strangers outside your immediate clan is the increase
in productivity due to the ability of specialization, as described in the text. Upon reviewing exa
Welfare Economics and Public
In this chapter we set the standard by which
to consider the well being of people in
The analysis of peoples welfare, in
comparison to a precisely defined ideal, is
known as welfare economics.
We then consider t
The Microstructure of Foreign Exchange Markets
Geographical Location of Foreign Exchange Trading
(Daily Averages on April 1, percentages)
1989 1992 1995 1998 2001 2004
Measurement and Methods in
Nominal measures of the public sector size.
Real measures of public sector size.
Measuring the public sector relative to the
economy as a whole.
Adjusting for GDP growth.
Adjusting for population growth.
Externalities are benefits or costs generated
outside of market transactions.
An externality exists whenever the decision of
a household or firm directly affects other
households or firms through non-market
transactions, conferring benefits
Income Distribution and
One reason for government involvement is
to alter the income distribution that would
otherwise be provided by a market
We begin by studying how to measure the
We then proceed to consi
Economics of the Public Sector
Public finance is field of study in economics
that is concerned with the financial
activities of the public sectorthat part of
the economy controlled by governments.
Richard Musgrave definition: The complex
of problems that