ECON Notes.docx - ECON T/Th 3:30 – 4:40 SI: W 12:55...

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ECON T/Th 3:30 – 4:40SI: W 12:55 [email protected]01/14 & 01/16What is economics?
Terms:Scarcity– Unlimited wants satisfied by limited resources. (land, labor, capital, entrepreneurialability)-Unlimited wants is a powerful economic assertion/assumption-Some ideologies are disruptors to the idea of unlimited wants (religion, philosophy)Opportunity cost –every time you do something, you’re not doing something else-Next best use of a resourcePossibility Model – PPC/F –shows youhow much stuff a society can make consumer goods vscapital goods-Maximum production possible for a society-Determinates of PPF: technology, resources, production methods, legalinstitutions/culture-Curve can shift left or rightGrowth –when PPF is moving outward-Raises the standard of living-Less people die/Overpopulation-Economic crash-Environmental concernsyResources (cell)– Capital (tools/machinery, touched natural resources), Entrepreneurial ability(C+L+L, accept risk), Land (untouched natural resources), Labor (human resources)Trade offs01/21MarketvCommandSelf-interestIncentiveInvisible handCoordinationPrice communicationChoiceCompetitionPrivate propertyCircular Flow Model – product markethouseholdsfactor marketfirmsDemand Supply Equilibrium -
Public Goods– non-excludabilityQuasi-Public Goods– non rivalry in consumptionExternalities- Cost or benefit that accrues to someone/group who is not part of the production-consumption transaction01/23Long run – secular trendShort run – business cycle3 macro measures:Growth – (real>nominal) per capita GDP, rule of 70/rate doublingLabor – unemployment, employment, labor force participation ratePrices – price stability, inflation, deflationRole of Government:Short runLong run01/28Modern growthSavings/leakageinvestment/injectionBanksFinancial system02/04DepreciationDisposable income = total income - taxesCircular flowNominal GDPprice x outputReal GDP = nominal / P.I. (hundredths)Price index – market basket / timeP.I. yearX = (new market basket yearX)/(old market basket base year) X 100Shocks– unexpected changes
Ex. Natural disasters, diseases, tax cuts, tech advancementsSticky price-Immediate run Ex. We have contracts right now and can’t change our price-Keynesian (liberal) ideaFlexible price-Long run Ex. We can eventually change out contracts and then out prices can change-Classical (conservative) ideaGDP-Final goods and services in a fiscal year-2 approaches: income and expenditure. We will only use expenditure.Expenditure:-C = Consumption-Ig = Gross Investment-G = Government Purchases-Xn = Net Exports (X-M)GDP = C+Ig+G+XnConsumption-About 70% of all spending-Durable goods: washers, fridge, furniture, car-Nondurable goods: food, clothing, shoesGross investment-Capital: all final purchases of machinery, equipment, and tools by business enterprises-New construction: housing-Inventory changes: what was left unsold during the year

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Term
Fall
Professor
deck
Tags
Monetary Policy, Federal Reserve System

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