(realestatezebra.com)
Greg Mankiw, an economics professor at Harvard, received a cool email from Gordon Boronow, an assistant professor at Nyack College. In it, Gordon says that he tells his students “that in five years if all they remember about economics is the first chapter [from Greg's book, which I think is this one], then their efforts will not be wasted.” To help them remember the contents of the first chapter, he created an acrostic: ECONOMICS! (Ha.)
Greg republished the acrostic on his blog and I’ve re-republished the acrostic below:
Ten Key Principles in Economics
Everything has a cost. There is no free lunch. There is always a trade-off.
Cost is what you give up to get something. In particular, opportunity cost is cost of the tradeoff.
One More. Rational people make decisions on the basis of the cost of one more unit (of consumption, of investment, of labor hour, etc.).
iNcentives work. People respond to incentives.
Open for trade. Trade can make all parties better off.
Markets Rock! Usually, markets are the best way to allocate scarce resources between producers and consumers.
Intervention in free markets is sometimes needed. (But watch out for the law of unintended effects!)
Concentrate on productivity. A country’s standard of living depends on how productive its economy is.
Sloshing in money leads to higher prices. Inflation is caused by excessive money supply.
! Caution: In the short run, falling prices may lead to unemployment, and rising employment may lead to inflation.
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Greg Mankiw’s blog and the post referenced above can be found here.
Gordon Boronow can be found here (scroll down to #23).
