00:00 01:01

hey Internet this is Jacob Clifford now
00:01
there's only two reasons why you're
00:03
watching this video either you clicked
00:04
on it because you're interested in
00:06
economics or your teacher is showing it
00:08
to you in class because they want you to
00:10
be interested in economics but in either
00:11
case you should be asking yourself why
00:13
do I even want to learn econ
00:19
perhaps your answer is because you need
00:21
it to graduate right you can't graduate
00:22
unless you pass your economics class but
00:25
that's a horrible reason to learn
00:26
something school should be about
00:27
learning concepts and skills that
00:29
improve your life not just checking off
00:31
boxes for graduation maybe you're
00:32
interested in economics because you want
00:34
to learn about the stock market and
00:35
learn about how to get rich bad news for
00:38
you that's a personal finance class
00:39
economics doesn't focus on the stock
00:41
market and wealth management that's a
00:43
completely different course but econ
00:44
degrees often earn more money than
00:46
people who have finance degrees or
00:48
engineering degrees but why what makes
00:51
economics so valuable in other words why
00:54
do you want to learn economics wait did
00:58
not they do it how to learn now stay
01:00
with me here the first concept you learn
in economics is scarcity the idea that
01:04
we have unlimited wants but limited
01:06
resources and economics is the study of
01:09
how we deal with scarcity how do we use
01:11
our scarce resources as efficiently as
01:14
possible or how do we get the best bang
01:15
for our buck and that's why you want to
01:18
learn economics it's gonna make you a
01:19
better decision maker but there attend
01:21
your own personal life or when you're
01:23
running a business we were trying to
01:24
promote some government policy thinking
01:26
like an economist will help you maximize
01:28
your own happiness make the most profit
01:30
or help the most people thinking like an
01:33
economist means seeing the unseen and
01:35
I'll give you an example many years ago
01:37
my wife was on the computer researching
01:39
flights to visit her family back in
01:40
Canada and there were three flights to
01:42
choose from a Thursday night flight
01:43
which was $275 a Friday night flight
01:47
which was $300 and a Saturday morning
01:49
flight which was three hundred and
01:51
twenty five dollars and at the time we
01:53
were in college and working in
01:54
restaurants from Monday through Friday
01:56
and earning about a hundred dollars per
01:57
day my wife was just about to purchase
01:59
the Thursday night flight because it was
02:01
the cheapest but because I took
02:02 03:07
economics class as I said wait now let's don't we just produce all our cellphones
02:04 03:08
think about this if she left on Thursday here in our own country why don't we put
02:06 03:10
night then she couldn't have worked in a tariff on foreign made mobile phones
02:07 03:12
the restaurant Thursday night and Friday and so Americans have to buy their
02:09 03:15
night so the true cost of that flight is mobile phones from American producers
02:12 03:16
not too Terrace make a lot of sense if you just
02:13 03:18
seventy-five dollars it's $475 once you look at the manufacturing jobs that we
02:16 03:20
factor in all those unseen costs the get in the United States and those are
02:19 03:22
opportunity cost so it turns out the the seen benefits but what about those
02:21 03:24
most expensive flight the Saturday unseen costs because labor is more
02:23 03:26
morning flight was actually the cheapest expensive mobile phones produce United
02:25 03:28
when you think like an economist now States would cost hundreds of dollars
02:27 03:30
that's just one simple example but I more and if consumers are spending more
02:28 03:32
can't tell you how many times my life on phones and they have less money to
02:31 03:34
thinking like an economist has saved me spend on other things perhaps they don't
02:33 03:36
time and money the whole thing with the go out and buy some new furniture or
02:35 03:37
flights is an example of microeconomics they don't go on vacation as much or go
02:37 03:39
that's a study of individuals businesses out to eat as much that means fewer jobs
02:39 03:41
and markets now macroeconomics is the in those other industries and this is
02:42 03:44
study of the whole economy things like why the vast majority of economists well
02:44 03:46
unemployment and inflation trade over 90% are opposed to Terrace the
02:46 03:49
government policies but this idea of benefits are obvious but they're likely
02:48 03:51
looking at opportunity cost and thinking not going outweigh those unseen costs
02:50 03:53
like an economist and seeing the unseen again this is just another quick simple
02:52 03:55
still applies for example think of example but in your study of economics
02:55 03:57
mobile phones you have one I have one we you're going to broaden your
02:57 03:58
all have one but none of them were understanding of markets and the economy
02:58 04:00
manufactured and produced in the US and you'll have a chance to question some of
03:01 04:02
at first glance that seems like a your unexamined assumptions about how
03:03 04:04
tragedy why are we shipping all these society is organized and how it should
03:05 04:06
jobs and all this money overseas why be organized and hopefully it'll improve
04:09
your ability to make decisions and see
04:11
the unseen and whether or not this is
00:00
04:14 what is economics the typical first-year
your first and only econ class or you 00:05
04:16
become an econ major I can tell you from
student walks into his first economics
04:18 00:07
my own experience that this is the most class with very little idea of what
04:20
important class that you're ever gonna
00:09
04:22 economics is he might have heard
take 00:12
04:23
to beat your online teacher and help you
something like economics is the study of
04:25 00:14
every step of the way I've already made money or economics is another word for
04:27
hundreds of videos to help you prepare
00:16
04:28 accounting or economics is hard don't
for your exams and help you understand 00:19
04:30
the textbook side of economics and I'm
take that class but none of those are
04:32 00:22
gonna keep doing that but this year I'm true economics is the study of the use
04:34
going to make a bunch of new videos
00:25
04:35 of scarce resources that have
they're gonna focus on exploring the 00:27
04:37
bigger ideas and show you the practical
alternative uses that's the classic
04:39 00:30
application of economics so be sure to definition of economics basically there
04:41
subscribe right now hit that
00:33
04:43 are people and people need resources to
notification bell and be back often I 00:36
04:46
guarantee you that the benefit will
fulfill their desires these resources
04:47 00:39
outweigh the cost cannot be infinite but the desires can
04:48
thanks for watching til next time
00:42
be so people need to make choices about
00:44
how to use their scarce resources
00:46
economists study these choices all
00:50
economic questions fall into one of two
00:52
categories positive and normative
00:56
positive economics describes what is and
01:00
normative economics argues for what
01:02
ought to be so a question like why do the tools economists have developed to
01:06 02:08
people use money is a positive question study human behavior abroad uses outside
01:09 02:10
and should people use money is a of what we would traditionally consider
01:11 02:12
normative question a general rule of economics
01:14 02:13
thumb is that if your economic model has the economists study not only markets
01:16 02:15
no value judgments it's positive but things like crime war the family
01:19 02:18
economics whereas if it does have value religion culture politics law and even
01:22 02:23
judgments its normative economics since genetics that's why it's not unusual to
01:25 02:27
to tell someone what he ought to do you see papers by psychologists sociologists
01:27 02:30
first have to judge what is best for him criminologists political scientists
01:31 02:33
economics is also divided in the anthropologists biologists
01:33 02:35
microeconomics and macroeconomics neuroscientists or legal scholars being
01:36 02:38
microeconomics studies the behavior of co-authored by economists
01:39 English (auto-generated)
individual agents and markets while AllMicroeconomicsEconomicsListenableRel
01:42 atedRecently uploadedWatched
macroeconomics studies the behavior of
01:44
the entire economy economists also have
01:48
their own branch of statistics called
01:50 Question 1
econometrics that specialized to  Scarcity requires that people must
01:53 make choices.
analyzing economic data since economic
01:56 Response: True
data usually comes from the real world
Correct answer: True
01:58
and not from controlled experiments Score: 2 out of 2 Yes
02:00
econometrics faces mathematical Question 2
02:02  Security is the most fundamental
challenges that other fields might not economic problem.
02:05
Response: False
Correct answer: False TANGIBLE 9. Goods in form of material
commodities
Score: 2 out of 2 Yes
CAPITAL 10. machineries are example of?
Question 3
 Adam Smith is the Father of MONEY 12. Used to buy goods and services
Economics. KARL 13. The first name of the author of the
Response: True Marxist view in economics

Correct answer: True SATISFY 16. To _______ our wants and needs is
the ultimate goal of economic activity.
Score: 2 out of 2 Yes
HOUSEHOLD MANAGEMENT 2. Oikonomia
Question 4 means
 Economics is best defined as the study
of how people, businesses, COMMAND 4. Economic system where no one
governments, and societies use their owns a private property
infinite resources. MICROECONOMICS 5. Study of individual
Response: False consumer and single firm

Correct answer: False CONSUMER 10. Goods that yield satisfaction

directly
Score: 2 out of 2 Yes
MARKET 11. Capitalism is very present in this
Question 5 economic system
 Macroeconomics is the branch of
economics that studies the economy as MIXED 12. Combination of 2 economic system.
a whole. LUXURY 14. Necklace, bracelets, watch are
Response: True ___________.

Correct answer: True LABOR 15. Teachers, cashiers, carpenter,

accountants are part of ______.
Score: 2 out of 2 
TOOLS 17. Positive and normative economics
are the _____ in economics.

SCARCITY 18. A problem created because of our

ADAM SMITH 1. Father of Economics unlimited wants and needs

ECONOMICS 3. A Branch of Social Science

concerned with the allocation of the scarce
resources

LAND 6. These factor of production includes the

fishes, birds and trees

WANTS 7. Our psychological desires

NEEDS 8. Food, shelter, clothing

00:00 01:01
How do you measure the size of an entire It’s the money you or I spend on physical
economy? goods, like coffee, and on services, like a
00:02 haircut.
Let’s say I buy a coffee here in London for 01:07
£3. In many developed economies like the U.K.
00:05 or the U.S.,
Those £3 are factored into the United 01:10
Kingdom’s GDP. consumer spending makes up more than half
00:09 of a country’s GDP.
And so is this barista’s salary. 01:13
00:11 The second part of the GDP equation is
And this espresso machine. investment.
00:12 01:16
In fact, most of what’s around you is part of This measures how much businesses spend
GDP. on things like buildings, land and
00:21 equipment.
GDP is an important gauge of the overall 01:20
health of an economy. It stands for: It also includes a major consumer
00:26 investment - buying a home.
Simply put, GDP measures the total value of 01:25
all goods and services in a country. Investment can take a hit when the economy
00:31 is suffering.
That means it measures a lot of stuff worth a 01:28
lot of money. You can see that in this chart domestic
00:35 business investment
Here in the U.K., GDP is around two-and-a- 01:30
half trillion dollars per year. plummeted in the U.S. during the financial
00:39 crisis.
In the United States, the world’s biggest 01:33
economy, it's around $19 trillion every year. That’s because companies were trying to
00:44 save money instead of
How do you get to these numbers? 01:36
00:46 putting it toward things like factories,
Well, you can calculate GDP in a few machinery and equipment.
different ways, but the most commonly used 01:40
equation goes like this: Okay, now we get to government spending.
00:51 01:43
consumption plus investment plus This is the money local, state and national
government spending plus net exports governments spend on things like roads,
equals GDP. schools and defense.
00:57 01:48
Let’s break that down. Government spending varies a lot depending
00:58 on each country’s approach to public goods
Consumption is another way of saying and services.
consumer spending. 01:54
Take for example France, where government
spending amounts to roughly 56% of GDP.
01:59
That’s compared to 41% in the U.K. and
38% in the U.S.
02:04
That brings us to the final part of the GDP
calculation: net exports, or exports minus
imports.
02:10
A lot of countries have negative net exports,
meaning they bring in more products than
they send out.
02:16
For example, the U.K. imports around $1
billion worth of coffee every year
02:21
but only exports around $315 million,
meaning its net exports of coffee are
negative.
02:27
Countries around the world collect data on
consumption, investment, government
spending and net exports.
02:32
This makes GDP a universal measurement
and a way for countries to stack up against
one another.
02:37
But it’s not just the sum of the equation
people look at.
02:40
You'll often hear about the GDP growth
rate, or the percentage change in GDP over
time.
02:45
Generally, if an economy is healthy, GDP
growth expands.
02:49
If an economy is in bad shape, GDP growth
contracts.
02:53
Two consecutive quarters of negative GDP
growth are referred to as a recession.
02:58
But GDP doesn’t always give a full picture
of the economy.
03:01
Critics say the equation puts too much
weight on production and manufacturing,
03:05
and not enough on services and the digital
economy.
03:09
Just think of Spotify. For $10 a month you
can listen to unlimited music from a huge
range of artists.
03:15
In the past, you would have had to buy all of
those albums separately, with each one
contributing to GDP.
03:20
It’s hard to factor a digital service like
Spotify into the GDP equation
03:25
which is used to measuring physical goods.
03:28
GDP also doesn’t measure economic
equality and well-being.
03:31
So even if a country is really rich according
to GDP, wealth may be spread unevenly.
03:36
Plus, GDP excludes unpaid work like
volunteering for charity or child care.
03:41
And it doesn't factor in costs like pollution
or illegal activity.
03:45
Some experts have come up with alternative
measures to GDP
03:48
that measure overall happiness and quality
of life.
03:51
But so far, none of these have stuck.
03:53
Maybe it’s just too hard to put an economic
value on that first sip of morning joe.
04:01
Hey everyone, Elizabeth here. Thanks so 00:51
Don’t forget to subscribe and click the bell button
much for watching our video. so that you can be part of our
04:04 00:53
Be sure to check out more of your CNBC Notification Squad.
00:55
Explains over here. First of all, many people think we should stop
04:07 using these terms of first and third
And leave us any other ideas in the 00:58
world.
comments section. 00:59
04:09 The terms are seen as insulting and vague, and
Talk to you later! while some nations might not be economic
01:03
English powerhouses, what’s to say the citizens don’t live
a happy and safe life, even without
01:08
a Big Mac and fries?
01:09
If we go back some years to 1952, a French
demographer Alfred Sauvy wrote about “Three
01:15
worlds, one planet.”
00:00 01:16
According to the United Nations, it no longer It is he who is said to have coined the term.
judges a country by a particular stage that 01:19
00:04 By first world, he meant the USA, Japan, South
it is at in its development. Korea and Western Europe.
00:06 01:23
Nonetheless, countries are ranked higher in terms By second world, he meant the Soviet Union,
of the comforts and opportunities afforded China, Cuba and communist allies.
00:10 01:27
to its citizens. At the bottom, in the third world, he meant all the
00:11 rest, societies that were mostly agrarian
We now call this the Human Development Index. 01:32
00:14 and poor.
Back in the day, we would judge a country by its 01:33
stage of industrialization, and the One of the reasons the term is decried is because
00:17 it was so vague.
first developed country in this sense was the UK. 01:36
00:20 There wasn’t really much analysis, and so in spite
Belgium followed, then Germany, then the USA, of northern Brits living in industrial
and then France and other western European 01:40
00:25 slums and working in inhumane conditions as
nations. George Orwell wrote in ‘The Road to Wigan
00:26 01:45
If we look at today’s Human Development Index, Pier’, because of Britain’s relative wealth, it was
the top ten countries in order are: deemed first world.
00:30 01:49
Norway, Australia, Switzerland, Germany, In fact, these days a professor at Harvard Medical
Denmark, Singapore, the Netherlands, Ireland, School has used the term ‘Fourth
Iceland, 01:53
00:36 World’, which includes the USA.
Canada, and 10th, believe it or not, is the USA. 01:55
00:40 This means a country of great wealth where some
The UK, which was once in first place, now stands parts of society live on the fringes,
in 16th place. 01:59
00:44 jobless, often drug-addicted, with no healthcare
Today we’ll look at why, in this episode of the and not so many opportunities to change things
Infographics Show, 3rd World vs 1st 02:04
00:49 around.
World Countries - What's The Difference? 02:05
They are living in a first world with third world in 2014 that 58% of the Indian population were
standards. living on less than $3.10 per day.
02:08 03:22
So, this is a rather confusing question we have India puts the poverty line at $1.90 a day.
posed. 03:25
02:11 This may be enough not to starve to death, but we
Do we use the term developing? can imagine that those people living
02:13 03:28
We can look at what has happened over many on that amount don’t have the freedom and
parts of Asia in the last twenty years. opportunities that Norway’s less well-to-do
02:17 03:32
While parts of China, India, Indonesia, Malaysia, people have.
and Thailand still have pervasive abject poverty, 03:33
02:22 In fact, in Norway, the average income is more
there is a lot more money. than $35,000 a year.
02:23 03:37
It isn’t exactly getting to everyone, though, and Only 3 percent of the population work very long
one might ask if farming rice in China hours, and all Norwegians, according
02:28 03:42
was any worse than making iPhone components to the Organisation for Economic Co-operation and
for hours on end in a factory in a polluted Development, can expect good, “environment
02:32 03:46
city. quality, jobs and earnings, income and wealth,
02:33 education and skills, housing, work-life balance,
But with this new money, infrastructure has 03:52
improved, and so too has healthcare and civic engagement, social connections, and health
education. status.”
02:37 03:55
We could say these countries are verily The same definitely cannot be said of any
developing. developing nation.
02:40 03:59
But why is Norway the most developed? Nonetheless, anyone in India will tell you about
02:43 great transformations, more job opportunities,
Is it still not developing? 04:03
02:45 an easing of poverty, and how far the country has
Does developed mean stasis? come in terms of developing technology.
02:47 04:08
Not really, all countries are still developing, but Norway is top of the Human Development Index,
others could be said to be going through so we could say this is the first of the first
02:51 04:13
major changes. world countries, even though we don’t use that
02:52 term anymore.
The U.S. Department of State explains why 04:15
Norway is so developed: “Per capita GDP The top 51 nations fall in the ‘High’ Human
02:57 Development bracket.
is among the highest in the world,” we are told, 04:19
due to thriving industries in this nation Out of 188 countries, India comes in at 131st.
03:01 04:23
of just 5.2 million people. Indeed, India’s super rich wealth and massive
03:03 growth has yet to trickle down to many of
Just take into account that Delhi has 18.6 million 04:28
people. the masses.
03:07 04:30
You only need to walk around Delhi to see poverty The HDI has three main categories: Environmental
all around you, you don’t have to sustainability, economic sustainability and
03:10 04:34
go looking for it. social sustainability.
03:11 04:36
India is developing due to its fairly amazing Right at the bottom of the HDI is the Central
economic growth, but still, it was reported African Republic.
03:16 04:39
Again, while we don’t use the term third world 05:54
anymore, you could say that this might mess that is always teetering on the edge of
04:43 violence.”
be the bottom of the list in so far as we have a 05:57
term for not being developed. We are of course mentioning the very worse
04:47 things, and no doubt a lot of people live
Why is that? 06:00
04:48 a happy life there.
For starters, life expectancy there is only 52, or 06:01
thereabouts. We just want to outline a kind of first, second and
04:52 third comparison.
It is tied with Angola, and only better than one 06:05
country, which is Sierra Leone. That’s why we have picked these three nations.
04:56 06:07
People there can expect to live to 50.1. We could also look at the country of Botswana,
04:59 which comes in 108th place.
By comparison, Norwegians on average can 06:11
expect to live about 30 years longer. This is quite low, but if you’ve read Malcom
05:03 Gladwell’s book, ‘Outliers’, you’ll
In India, the life expectancy is 68, somewhere in 06:15
the middle. know it's home to possibly some of the happiest,
05:06 laidback, self-sufficient people in the world.
The 4.6 million people living in the Central African 06:19
Republic have faced extreme poverty, Or was, until recent times.
05:11 06:21
war, ethnic and religious cleansing, and political According to Gladwell, they have a two hour work
violence. day on average, and play around most
05:14 06:25
It’s said to be the worst place in the world to be of the time.
young, and even if you get a job, the 06:26
05:17 They don’t need iPhones or dinner sets made by
average wage per year is said to be $400, Hermes.
although this might need updating. 06:28
05:22 They are the last Hunter/Gatherer tribe called the
Half of the population is illiterate, and if you go to ǃKung Bushmen of the Kalahari Desert.
school you might not do more 06:33
05:25 These wanderers also moved through Angola
than 4 or 5 years. (which is placed 150th on the HDI).
05:26 06:37
It has one of the highest maternal mortality rates in Unfortunately, what they hunt and gather is being
the world, and about a quarter of destroyed by development.
05:30 06:41
the women have undergone genital mutilation. Anthropologists say they get over conflicts in
05:32 peaceful ways and generally are a happy
If that isn’t bad enough, human rights hardly exist. 06:46
05:35 lot.
Complain, and you might find yourself being 06:47
arrested summarily and sent to a terrible They provide for their kids with devotion, and
05:39 remain mostly monogamous.
jail. 06:50
05:40 Wealth is shared with everyone.
Corruption is rife, and there is not much anyone 06:51
can do. In more recent years, that has changed as some
05:42 were forced to settle in one place, and
The country has a history of labor rights violations 06:56
as well as child labor. that’s when the problems arose.
05:46 06:57
Children and women regularly face violence after As soon as they got doors, they started shutting
being accused of being witches. them and sharing less.
05:50 07:01
One travel blogger talked of his experience in the They are also very much third world by western
capital of Bangui, saying it was “a standards.
07:04
So, are they any worse off than an overworked,
overweight, diabetes and hypertension suffering
07:10
rich first world man that takes pills to sleep and
often drinks to oblivion?
07:14
Let us know in the comments!
07:15
Also, be sure to check out our other video called
What Can You Buy with a Million Dollars?!
07:19
Thanks for watching, and, as always, don’t forget
to like, share, and subscribe.
07:21
See you next time!