Capital Case

Capital in scarce and when it is spared, someone will pay to have it used. The only way to spare capital is to spend less than what is earned (save). Investors of capital have a proposition: compensation for more risks. It is said that investing has the same benefits as running a casino, where the odds are in someone's favor if he or she is patient and ready to bear the sporadic setbacks.

Chapter 8

In countries where farmers make up a tiny fraction of the population the government gives large subsidies for agriculture. On the other hand, countries where the population of farmers is large the subsidies are smaller. These farmers are forced to sell their crops at lower prices so that other citizens can get the food cheaply. Little inefficiencies disturb the basic functions of market economies like taking inputs and making goods and services in the most efficient way. Governments shouldn't be in the business of giving incentives for workers to do things that don't make sense.

Chapter 9

The business cycle is the cycle of recession and recovery. Gross domestic product, or GDP, is the value of all goods and services in an economy. When an economy is talked about growing a certain percent, it is talking about the GDP growth. It is the good measure of the well-being of an economy. Real GDP is the figure adjusted to put inflation into account. Nominal GDP does not put inflation into account. A nation's GDP per capita is where the GDP is divided by the nation's population. It does not count any economic activity that is not paid for, such as work done in a home like cooking and cleaning.

Chapter 10