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Understanding economics and how it affects business

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Explain basic economics.
Explain what capitalism is and how free markets work.
Compare socialism and communism.
Analyze the trend toward mixed economics.
Describe the economic system of the united states, including the signifance of key economic indicators (especially GDP) productivity and the business cycle.
Contrast fiscal policy and monetary policy, and explain how each affects the economy.

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Solution Summary

The questions are about various topics in basic economics.

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Hello, here's a general idea about each question. Referencing remark at the end.

1- Economics is the science of choice, it's about how societies use scarce inputs to produce goods and services for consumers. It has 2 main branches:
Microeconomics: looks at the small picture in that it studies individual units of the economy, like the market of a specific product, the behavior of consumers, of specific firms, etc.
Macroeconomics: looks at the big picture in that it studies the economy as a whole.

2- Capitalism is an economic system where there is private ownership of resources and pursuit of profits. There is freedom in capitalism.
Free markets work without government interference; it's the market that solves the three basic economic questions of what, how, and for whom to produce. Consumers send signals to producers of which products to supply and producers supply these products in pursuit of their own profits. All is done using the system of prices.

3- Communism is when the government controls and decides everything, it's ...

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