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Econ Notes

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ECONTWO
1
Micro * Individuals (Buyer) * Sellers (Companies * Market Equilibrium * Market structure - Industry
Macro
* Aggregate * Household * Business Sector * Government
Goals in Macro Economic Policy 1. Price Stability – Inflation → Increase in general price level → Money Supply ↑ 2. Sustainable Economic Growth 3. Full Employment
Price Stability * To measure success, inflation rate must e kept at single digit (less than 10%) * An increase in price levels will reduce the value of money * Inflation rate is measured every month * Inflation rate – measures the overall increase in price level in a given time period
Tao – Bank – Company – Price
10 % wage vs. 0% inflation
↓Demand -↓Price-↑Demand
Deflation in Japan 1990
Life Expectancy
Saving vs. Spending
Saving → Government
66 % Dependent
34 % 18-64
↓Demand = ↓Price = ↓Q Supply = ↓ # of worker = ↑unemployment = ↑ Government Rely = ↓Interest Rate 0.000001%
Iceland – 7 to 8 %
Economy Collapsed
Largest Denominated Note
Zimbabwe – One Hundred Trillion Dollars

2
World Bank – Long term loans
International Monetary Fund – Short term loans * Interest * Policy Recommendation * Economic Policies
How do we measure inflation rate?
Government uses a “basket of goods” to determine the increase in price level
Basket of goods is composed of different commodities such as food, clothing, oil, transport, utilities etc.
Ex. May 2013 – P100 2014 – P110 Inflation 10% Basket of Goods | 2000 | 2006 | Food, Beverage & Tobacco | 40.97% | 43.47% | Clothing | 2.96% | 3.36% | Housing, Fuel, Light & Water | 22.46% | 23.70% | Services | 18.36% | 15.72% | Miscellaneous | 15.25% | 13.75% | Price Stability in the Philippines Inflation Rate Headline Inflation – Increase in the Basket of goods Core Inflation – Exclude Volatile Year | Headline | Core |

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