Colombia monetary system

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TEAM: CSF_5

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Juan Pablo Rodriguez Orta A01307196
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Alexander Villanueva Hernández A01307197
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Jorge Alexander Suarez Ardila A01307199
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AdrianaHelena Clavijo Perez A01307394
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Ricardo Rodríguez Garcia A00452746

Chapter 1 --- Questions 1 & 7
1. The great English economist Alfred Marshall (1842-1924) invented many of the tools of modern economist, but he was most concerned with the application of these tools to the problems of society. In his inaugural lecture, Marshallwrote:

“It will be my most cherished ambition to increase the numbers who Cambridge University sends out the world with the cool heads but warm hearts, willing to give some of their best powers to grappling with the social suffering around them; resolved not to rest content till they have opened up to all material means of a refined and noble life…”

Explain how the cool head might provide theessential positive economic analysis to implement the normative value judgments of the warm heart. Do you agree with Marshall´s view of the role of the teacher? Do you accept this challenge?

The economic progress of a society is a tradeoff between the free and efficient market and the social programs to improve the living conditions of the people as a whole. The cool heads allow to control, toregulate and to improve the benefits of the capitalism; they weight the costs and benefits to take decisions and to create policies about inputs and outputs of the markets. The warm hearts center their attention to get higher incomes and not necessary take consideration of the social issues as the scarcity of the natural resources.

We do accept the challenge, the view of the professor is thatone required to improve our world in the nowadays. We need to learn about how to achieve the economic growth using the tools of the economic science to live in a fairness world, to push our economies in the Latin-American region avoiding the mistakes that are affecting the economic progress of our countries and is making a poorer egalitarianism in our societies.

7. Some scientistsbelieve that we are rapidly depleting our natural resources. Assume that there are only two inputs (labor and natural resources) producing two goods (concerts and gasoline) with no improvement in society´s technology over time. Show what would happen to the PPF over time as natural resources are exhausted. How would invention and technological improvement modify your answer? On the basis of thisexample, explain why it is said that “Economic growth is a race between depletion and invention”


With fewer natural resources and no technological improvements the production will decrease till it is over. The PPF will shift to the left as the society cannot produce more gasoline (public goods) and fewer concerts (private goods) than before. The natural resources as water, allow thesociety to live, to work and to have the capital to buy tickets for the concerts. Without petroleum, there will not gasoline to transport the concerts, etc.

Concerts
Gasoline

Fewer Natural resources

Concerts
Gasoline

Fewer Natural resources

With the technological improvements, the efficiency will improve and the PPF will shift to the right. For example, more technology in therefinery plant will produce more gasoline with the same petroleum; more technology will produce more concerts, the natural resources won´t be wasted inefficiently and therefore a longer usage of them.

Concerts
Gasoline

Technological Improvement

Concerts
Gasoline

Technological Improvement

The Depletion and invention race…
With the investment in the invention comes the...