Skip to main content

Unit 1

  • Positive: facts; claims that attempt to describe world as is; very descriptive. Ex: minimum wage laws cause unemployment
  • Normative: opinions; claims that attempt to prescribe how world should be. Ex: government should raise minimum wage
  • Wants: desires of the citizens
  • Needs: basic requirements for survival
  • Scarcity: problem unlimited wants and needs with limited resources; fundamental problem that all societies face
  • Shortage: quantity demanded > quantity supplied
  • Surplus: quantity supplied > quantity demanded
  • Factors of Production:
Capital- human: knowledge and skills workers gain through education and experiences // physical: human made objects used to create other goods and services
Entrepreneurship- risk taker and innovative
Land- natural resources
Labor- work exhorted
  • Production Possibilities Graphs (PPG, PPC, PPF): shows alternate ways to use resources, shows most that society can produce if it uses every available resource to best of its ability
  • Six Key Functions of PPC:
  1. Fool employment- 80-90% factory capacity, 4-5% unemployment
  2. Productive efficiency
  3. Fixed resources: land, labor, capital
  4. Fixed state of of technology
  5. No international trade
  6. Two goods produced
Point D: inside curve; attainable and inefficient, underutilized, unemployment, underemployment, war, famine, recession and depression
Point A, B, C: on the line; efficient and attainable
Point E: outside curve; unattainable due to technology and economic growth

*Bowed out = Concave // Same = Constant

Comments

  1. Phuonganh NFebruary 5, 2018 at 2:23 PM

    know that for the shortage because quantity demand is more than the supply, it results in an increase in price. Vice versa for the surplus it is a decrease in price

    ReplyDelete

Post a Comment

Popular posts from this blog

Unit 2

Real GDP: Price x Quantity ; value of output produced in constant based year prices that is adjusted for inflation. Can increase from year to year only if output increases. Nominal GDP: Price x Quantity ; value of output produced in current year prices. Can increase from year to year if either prices or output increases In the base year, current prices is equal to base year (constant) prices In years after the base year, nominal GDP exceeds real GDP In years before the base year, real GDP exceeds nominal GDP GDP Inflator: a price index used to adjust from nominal to real GDP In the base year, the GDP deflator = 100 For years after the base year, GDP Deflator > 100 For years before the base year, GDP Deflator < 100 Deflator Formula: new-old/old GDP Deflator = (nominal GDP/real GDP x 100) Inflation: a general rise in the price level (new[price index]-old[price index] /old x 100) will result in percentage Consumer Price Index: measures cost of ...
1 comment
Read more

Unit 4: Monetary Creation Process

Money Creation Process: (assume 10% required reserves) $1000 cash deposited in checking account => no immediate change in MS => Assets // reserves $1000 $1000 FED purchase of bonds from public (deposited into checking account) => immediate increase in MS of $1000 => Liabilities // demand deposits $1000 RR = $100 (.10 x 1000 deposit) Single Bank: of Money in single bank can create (loan out) = ER Actual Reserves-Required Reserves=Excess Reserves; $1000-$100=$900 in ER Banking System: create money by multiple of initial ER; monetary multitude=1/RR=1/.1=10 System New Money=deposit multiplier x initial excess reserves; 10 x $900 = $9000 Total change in MS as result of deposit; initial deposit of right now + Banking system = total change; $1000+$900=> $10000
Post a Comment
Read more

Unit 7: Balance of Payments

Balance of Payments: Measure of Money inflows and outflows between US and rest if world; inflows referred as “credits” and outflows referred as “debits” Balance of Payment divided into 3 accounts: Current Account: Balance of Trade aka Net Exports, Net Foreign Income aka Net Investment: income earned by US owned by foreign assets, Net Transfers: foreign aid Capital/Financial Account: Includes purchase above real and financial access (ex: direct investment- in US, debit is credit to capital account; brand factory in area); direct investment by US firms/individuals in a foreign country are debits to capital account; purchase of foreign financial asset reps a debit to capital account (ex: rich buys stock in petral China); purchase of domestic product reps purchase of credit in financial account (ex: Venezuela buys steak from Venezuela); current and capital account should zero each other out; Real asset: real estate, G & Financial asset: stocks or bonds Official R...
Post a Comment
Read more