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• 1 Week 1

• 1.1 Lecture: Introduction: Economics after the crisis

• The global economy since WWII. The big question was how to organize global affairs after a devastating war? The countries decided to design a system and found three institutions. Define those 3 institutions:       

  • The World Bank (chaired by an American). 
    
    
  • International Monetary Fund IMF (chaired by a European). 
    
    
  • The Gold standard. US Dollars were interchangeable for gold at the set price of $35,- per ounce. 

• World Bank. The World Bank was created at the 1944 Bretton Woods conference. Although many countries were represented at the Bretton Woods conference, the United States and the United Kingdom were the most powerful in attendance and dominated the negotiations. What was the original intention of the founding of the World Bank? 

  • The intention behind the founding of the World Bank was to provide temporary loans to low-income countries that could not obtain loans commercially. 
    

• IMF Alongside the World Bank, the International Monetary Fund was founded as part of reconstructing international payments after WWII. What's the IMF's objective after WWII?    

  • The IMF's objective was to ensure compliance with the Bretton Woods Agreements and to achieve international agreements on exchange rates. 
    

• IMF stable exchange rates.To ensure stable exchange rates the rates were fixed with the US Dollar from 1945 to 1971. But in 1971 President Nixon stopped the gold standard.What happened since 1971 with the exchange rates?

  • Since 1971 the IMF is fostering a stable system of exchange rates. 
    

• In gold we trust!Provide the definition of the gold standard:

  • A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. 
    

• The US dollar becomes the world's reserve currency. Dollars are always interchangeable against gold at the set price of $35,- per ounce of gold.  What aspect makes this currency stronger with gold?

  • There is only a certain amount of money that could be printed because there is a limited amount of gold available. 
    

• Collapse of Bretton Woods.In 1971 President Nixon decided to close the gold standard. It sparkled the so-called President Nixon shock. US Dollars are not interchangeable anymore. The exchange rate becomes floating.Why did President Nixon decide to do this?

  • Nixon encountered a perfect storm.
    
    
  • The US was in a recession.
    
    
  • The US needed money but was tightened to the gold standard.

• 2 Week 2 - Great economic thinkers and their theories

• 2.1 Economics

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• Adam Smith (1723-1790) was the father of economic thought.Smith laid the foundations of the classical free-market theory.Disagreement exists between classical and neoclassical economists about the central message of Smith's most influential work.Neoclassical economists emphasize > invisible hand.Classical economists believe that smith emphasized > the division of labour.Adam Smith listed three important economic values.What are those three values?

  • Liberty.
    
    
  • Justice.
    
    
  • Benevolence (the will to do good).

• Economics is a field of study. It is a social science. What was the Greek definition of economics?   

  • The study of household management. 
    

• The economic revolutionFrom the beginning of civilization, human beings have faced the challenge of survival, which depends upon two factors.What are those two factors? 

  The survival of humans depends on:
  
  

  • Work.
  • Cooperation.