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Change supply:
human, physical, labor, land, entrepreneur
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Ceteris
paribus
all things equal
-
Demand
and quantity demand.
Demand is a curve and demand is a line.
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Opportunity
cost
Sacrifice
-
-
Robinson Crusoe. Had all his work done by Friday
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Father of economics, What causes wealth? Wealth of nations, 1776
Adam Smith
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Can raising min wage hurt the poor?
- Destroy jobs,
- replace labor with machines
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Market
economy
decisions made by consumers and businesses
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Command
economy
decisions made by government
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Why does the demand
curve slope downward
income effect and substitution effect
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Why does a supply curve upward
most efficient resources used first
-
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What causes shortage?
Artificially low prices.
-
d, D, ad
my demand for tea, every ones demand for drinks, everyone demand for everything
-
GND/GDP
- Gross National Product
- Gross Domestic Product
-
Economic growth is important because
- it’s the only way everyone can have more of everything.
- Economic growth really took off during the industrial revolution.
-
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Frictional
Unemployment that occurs with the normal workings of the economy, such as workers taking time to search for suitable jobs and firms taking time to search for qualified employees.
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Structural:
Unemployment that occurs when there is a mismatch of skills and jobs.
-
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Real/Nominal
rate of interest
real + interest = Nominal.
-
Types
of money
barter, commodity, species, gold/silver, fiat, check, credit cards
-
What
is fiscal policy ?
The balance of government spending and revenues
-
What
are the goals of fiscal policy?
- Economic
- growth, higher wages and full employment.
-
Who
controls fiscal policy
Congress and the president
-
What
is contractionary fiscal policy
- Taxes
- up and government spending down
-
What
are the tools of contractionary fiscal policy
In order to lower GDP to lower inflation.
-
What
is expansionary fiscal policy
Taxes down and government spending up.
-
Who
controls monetary policy
-
What are the 2 types of monetary policy and discuss the tools of each
Contractionary-sell bonds and raise interest from lending to banks. Expansionary- buy bonds and lower interest.
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-
-
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MULTIPLIER
ratio of aggregate demand and increase from original AD
-
-
-
-
-
real interest
interest adjusted for inflation
-
nominal interest rate
minimual interest rate
-
federal reserve bank
controls money supply and sets interest rates
-
tools of federal reserve bank
control money supply and buy and sell bonds to raise and lower discount rates.
-
Inflation
money is worth less
-
What is deflation
Money is worth more
-
What causes inflation
increase in money supply
-
What caused deflation
money is worth more.
-
How do banks make a profit
Borrowing money from depositors and lending it at a higher interest rate than they borrowed it for.
-
What is supply side economics
Pollicy used to encourage an and increase in output
-
3 tools of supply side economics
- lower income taxes
- lower spending
- lower regulations
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