Microeconomics questions

Economics
Tutor: None Selected Time limit: 1 Day

1. What is your understanding of laissez-faire? What are some of the arguments that underly the general laissez-faire precept?

2. Explain the concept of globalization. What are the benefits and costs of globalization?

Nov 5th, 2014

1.  The term laissez-faire is French for " let it be".  In economics, it represents a policy prescription.  Some of the arguments for the laissez-faire precept are :  the economy may have short periods of unemployment. However, market forces restore economy to full employment; prices and wages are adequately flexible such that supply equals demand most of the time.

2.  Globalization is a process by which economies and cultures of different countries become integrated.  For globalization to occur countries should be open to the world so that flow of goods, investment and communication can occur smoothly without barriers between different countries.

The benefits of globalization include GDP growth for all countries especially for the third world countries.  In addition, equalization of income distribution takes place slowly but surely.   Lastly the communication media such as Internet spreads knowledge, education and awareness among people of world nations.

The cost of globalization includes exploitation of third world countries because they can provide cheap labor due to necessity.  Also globalization increases pollution of the environment because of loose regulations in the third world countries.  Recently the globaslization is playing a part in the spread of deadly diseases such as Ebola, AIDS etc.

Nov 5th, 2014

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Nov 5th, 2014
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Nov 5th, 2014
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