Free Essay

Econ

In:

Submitted By dakotaloren
Words 412
Pages 2
September 21
Inflation


a continue increase in price level

There are three well known price index


Consumer Price Index(CPI)


CPI=current market basket divided by base year make basket multiplied by a hundred ○

Inflation= CPI current minus CPI base divided by CPI base multiplied by a hundred ○

There are issues with this





not accurate display of inflation substitutions Producer Price Index(PPI)



helps predict CPI changes




measures the speed of prices increase for production resources

buys product to help manufacture something

Gross Domestic Product(GDP)


comprehensive index measures the average change in CPI and PPI => Gross
Domestic Product

*Inflation is bad because we realize our money is worth less
The Cost of Inflation


Purchasing Power Cost


nominal wage



depends on price level




real wage(purchasing power)

Efficiency Cost



waste and physical resources




time and energy

harm and investment

Stability Cost




inflation=>recession

Aggregate Demand


the total demand for all goods and services in an economy

Four Types of Inflation


Demand Pull Inflation



aggregate demand increases so does price




boom=>jobs=>income

loan decreases demand increases

Cost Push Inflation





wages goes up prices go up loans goes up costs goes up

Expectatives




self fulfilling

Control Inflation


control money supply



using interest rate



wage­price control

September 23

Economic Growth


an increase in real gross domestic product occurring over some time period



an increase in real gross domestic product per capita over some time period

Growth happens in two ways


inefficient growth



efficient growth

The Rule of Seventy


aprox. number of years required to double in real GDP

Three Main Sources for Growth


supply


more resources, productivity, technology, division of labor, IPR’s, economic freedom, government policies, new ideas



demand


income=>tax cuts



government policies=>stimulated

Benefits of Growth


improved products services



add leisure



standard living increases

Recession Two Booms


recession





change in demand=>common change in supply=>uncommon

aggregate demand



the total demand for all goods and services in the economy



AD=C+I+G+NX

Non Income Deteriments of C and S


wealth



expectation of prices



real interest rate



income and debts



inflation



consumer confidence

September 25
Interest


investment is around 15%



uses the money in ways which brings benefits over many years(physical investment)



many factors


real investment rate



sales



acquisitions and merges



business tax



technology



business confidence

Keynes GDP Equilibrium


income = spending



total demand = total supply



leakages(taxes,savings,imports) = injections(government spending,investments,exports)




leakages causes gross domestic product to decline injections causes gross domestic product to increase

Similar Documents

Premium Essay

Econ

...Econ Problem Set #3 1. Suppose that a comic book publisher pays an annual licensing fee of $20,000 for the rights to an artist’s character. Which would have a larger impact on the number of readers of the comic using this character: (i) an increasing in the printing costs associated with publishing the comic, or (ii) an increase in the artist’s licensing fee to $22,000. Please carefully explain your reasoning. The increase in printing cost would have the larger impact on the number of readers of the comic. Because the increase in printing cost could be thought as a variable cost increase. The increase in cost would vary when the quantity increases. The increase costs per book could be easily realized and thus the publisher would choose to increase the price of goods. The number of readers would thus decrease due to increase of selling price. For the increase in license fee, it would be considered as fixed cost, which is more important in the short run business instead of long run businesses. 2. A firm's total cost schedule and the demand for its product are summarized in the table below (a) Complete the table and use the tools discussed in the online lecture and in the book to determine the level of output that maximizes the firm's profit. Costs | Revenues | Quantity Produced | Total Cost | Marginal Cost | Quantity Demanded | Price | Total Revenue | Marginal Revenue | 0 | 0 | - | 0 | 155 | 0 | - | 1 | 70 | 70 |...

Words: 505 - Pages: 3

Premium Essay

Econ

...ECON 191, Fall 2012 Guidelines for Writing an Economics Research Paper Writing a good economics paper is both an exciting and a nontrivial task. It requires a sustained effort in identifying an important question and in developing a credible model to think about that question or a testable hypothesis to answer it. In many cases it may require collecting data that gives the opportunity to test the hypothesis that you develop. You are encouraged to structure your paper in four parts: introduction, literature review, body, and conclusion. A brief abstract of no more than 100 words should precede your paper. Introduction Identifying a significant and well formulated question is the single most important part of the research process and the most difficult as well. A good research question has to be concise (remember, you are writing a 15-page paper, not a book), feasible and important. Choosing a research question requires balancing importance and feasibility. Feasibility means tractability for theoretical research and data availability for empirical research. Whenever you come up with an idea for a research question, always try to think about a critic sitting in front of you asking “Why should I care about this?” Consider this question to be a first filter for your research question. Identify a well-defined research question. The introduction is where you (1) present the research question, (2) motivate why it is important and briefly outline (3) how you go about answering it...

Words: 1405 - Pages: 6

Premium Essay

Econ

...ECON Project I. Introduction The efficient market hypothesis says that these returns should not be systematically related to the information known in 1990. We have the data of the return of the stock prices from various firms over the four-year period between the end of 1990 and the end of 1994. If the characteristics of a firm reflected the return of the stock, this could help with predicting the stock price in the future. We hypothesize that the return of the stock are related to debt capital ratio, earnings per share, salary of the CEO, net income, logarithm of net income and salary, and the stock price at the end of 1990 and 1994. II. Literature Review We are formulating how the CEOs compensation can affect the stock prices within a four-year period between the end of 1990 and 1994.An investigation based on the use of individual evaluation in CEO’s incentive plans that contrasts with objective stock price based measures may involve. Using complementary data evidence can be shown that individual performance evaluation increases growth opportunities (Bushman p. 161-193). An examination of the executive compensation structure of 153 randomly-selected manufacturing firms in 1979–1980 provides evidence supporting advocates of incentive compensation, and also suggests that the form rather than the level of compensation is what motivates managers and CEOs to increase firm value (Hamid p. 163-184). III. Data and Methodology Our data is a list of observations from 142 different...

Words: 1407 - Pages: 6

Premium Essay

Econ

...25 markers Econ The term inflation means a persistent increase in the level of prices. The question believer that an increase in aggregate demand can cause inflation, however there can also be other factors that can cause inflation. The term aggregate demand is that total planed expenditure in the economy. Known by the identity C+I+G+(X-m). In macroeconomics there are 2 types of inflation, demand-pull inflation and cost-push inflation. The demand-pull inflation is caused by an increase in total spending (aggregate demand), the economy is producing beyond the economy’s ability. The aggregate demand in an economy strongly outweighs the aggregate supply, which cause the price to increase. As the economy reaches full capacity, firms will be struggling to produce enough to meet the rising demand. As you can see from the figure, AS is slow curving up and becoming inelastic because of full capacity. The demand curve then shifts to the right because of a high demand, from AD1 to AD2. This causes involuntary stock depletion due to a low supply. When this happens, firms will choose to increase price to widen the profit margins. So price level increase from P1 to P2. Furthermore, as employment in an economy increase, the demand in goods and services will be much more inelastic. This allows firm to increase the price more without any significant fall in demand. There are various reasons that can cause an increase in aggregate demand. First of all, a decrease in exchange rate will...

Words: 626 - Pages: 3

Premium Essay

Econ

...Will Bury Business Proposal Econ/561 March 2, 2011 To: Whom it May Concern From: Will Bury Date: March 2, 2011 I have gathered you here today to discuss the future of my company Will Bury’s Digital Books. My company’s structure is monopolistic competition, which mean as demand increases, prices decrease. To make any profits, I have to make sure that my product is in demand (Halmos, 1995). After that, it is in my best interest to determine ways to increase revenue, minimize cost, profit maximizing quantity, concepts of marginal cost and marginal revenue, pricing and non-pricing, barriers to entry, and product differentiation. The things I have listed will ensure the success of my company. Increase Revenue and Minimizing Cost Increasing revenue and minimizing cost is what we strive to do as an organization. Many things considered in the process of creating a plan to increase revenue and minimize cost. I believe that I first need a budget to be set so I do not overspend; therefore, I will minimize cost because I will not spend any unnecessary money. One way to cut cot is to do just in time processing; orders are produced when orders are complete. This will prevent overstock. Instead of hiring a high school graduate or overseas staff, my plan is to partner with local colleges and getting some interns. I can get interns to work free; this will cut cost and ultimately increase revenue and minimize cost. Minimizing my variable cost is also away to minimize cost and increase...

Words: 1199 - Pages: 5

Premium Essay

Econs

...econs Question 1: HCI Prelim 2007 The unemployment rate in Singapore increased from 2.7% in 2001 to 4.2% in 2005. | (a) | Explain the main causes of unemployment in Singapore in recent years. | [10] | Introduction Define unemployment. State that there are mainly 3 causes of unemployment in Singapore. Cyclical unemployment in Singapore State Cyclical unemployment is related to the business cycle. Elaborate During an economic downswing (recession or depression), aggregate demand decreases and firms find they cannot sell all their current output, and stocks pile up. Firms will then adjust to the deficiency of demand by cutting back on production and reduce workers, leading to an increase in cyclical unemployment. Exemplify Over the last 2 decades, recessions or economic slowdown have been largely triggered by external shocks to our economy such as the Asian Financial Crisis in 1997/98; global dotcom crisis in 2000/01; September 11 terrorist attacks in 2001; the SARS epidemic in 2003 and most recently the Global Financial Crisis (US sub-prime mortgage crisis) in 2008/09. The economy went into sharp contractions as a result of these external shocks. These shocks badly affected our export trade with the rest of the world, tourism and international banking as well as financial services sectors. In short, it hit our export revenue (X) and investment (I) components of AD causing domestic output to fall. And since exports from Singapore are dominated...

Words: 2027 - Pages: 9

Premium Essay

Econ

...ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma Extra Problems #1 Suggested Answers and Comments Notice: (1) This set of extra problems contains 25 multiple-choice problems and 6 analytic (short-answer) problems. These problems are not homework and will not be graded. The aim of these problems is to provide you with additional exercises. (2) I will give solutions of the assignment and the “extra-problem” set after the due date. Page 1 Problem 1~25: Multiple choice problems 1. C 2. A 3. D This problem helps you pay attention to the difference between variables and functions. First, whether prices (wages are prices for labor) are assumed to be flexible or 4. C sticky depends on the time horizon. In other words, the assumption of flexible prices is proper in a long-run model while the assumption of sticky prices makes sense in a short-run model. Second, a large part of macro-theory is based on the optimizing behavior of individual agents, such as households and firms, but the main concern of macroeconomics is the movement of the whole economy aggregated from those individual decisions. 5. B Economists, as well as most other social scientists, cannot do controlled experiments. 6. A Consider the National Income Accounts Identity: Y = C + I + G + NX 7. B 8. C Inventory is a kind of investment, so the sale of inventory can be understood as a decrease of investment, but there is an increase in consumption in the same amount...

Words: 1249 - Pages: 5

Premium Essay

Econ

...ECON 2113 Homework 2 L4 Hu Weiwei 20268464 Xu Lili L4 Hu Weiwei 20268464 Xu Lili 1a. The demand curve is estimated as Qd = 1600-2400P and the supply curve for pay telephone service is Qs = 200+3200P. When equilibrium is reached, the quantity demanded is equal to the quantity supplied. Thus, we can solve 1600-2400P = 200+3200P to find out the equilibrium price. By calculation, the equilibrium price P = $0.25. Substitute P = $0.25 into the demand curve equation, Q = 1600-2400(0.25), the equilibrium quantity Q = 1000. Therefore, the equilibrium price is $0.25 and the equilibrium quantity is 1000 pay telephone calls per month. 1b. With the effective price ceiling at $0.10 on local pay phone service in long run, it is below the equilibrium. Since the quantity demanded is larger than the quantity supplied after the price ceiling is imposed, shortage is resulted. As the price is restricted at $0.1, though Qd = 1600-2400(0.1) = 1360, Qs = 200+3200(0.1) = 520 < Qd = 1360. The quantity supplied is not enough to satisfy the quantity demanded. It results in a shortage of 1360-520 = 840 pay telephone calls per month.Therefore, the maximum quantity...

Words: 2075 - Pages: 9

Premium Essay

Econ

...Principles of Marketing (MKTG 320) Fall 2013 Syllabus (Tentative) Madan M.Batra (MBA, Ph.D.)  Professor of Marketing and International Business Room 406A Eberly 724-357-5776 (Office) 723-388-9595 (Cell) batra@.iup.edu Office Hours  Tuesdays and Thursdays: 12:15 to 2:00 p.m. & 3:15 to 3:30 p.m. Wednesdays: 1:00 to 2:00 p.m. Please see the D2L course website for announcements concerning any changes in office hours during a specific week. Instructor Profile I am a professor of marketing and international business at Eberly College of Business and Information Technology. My academic preparation includes MBA in International Business (Dalhousie, Canada), and MS in Marketing and Ph.D. in International Business with focus on International Marketing—both from the University of Wisconsin-Madison. I have worked at a managerial level in a large multinational enterprise. I have taught a wide range of courses--International Business, International Marketing, The Global Village, Self-Marketing, Marketing Internship, Principles of Marketing, Consumer Behavior, Marketing Research, Seminar in Marketing, and Marketing Management at undergraduate, graduate and executive levels. My research interests are in international business, business sustainability, international marketing ethics, advertising ethics, self-marketing, export marketing, cross-cultural marketing, experiential education, and effective pedagogy. My research articles are published in numerous journals that...

Words: 1615 - Pages: 7

Premium Essay

Econ

...Econ 545 Micro Analysis Project 1 Business Economics 545 Fewer Physicians Project 1 INTRODUCTION Based in recent surveys, reports show a trending decline on the rate at which physicians move. Statistically, this may suggest the economy is preventing or affecting physicians from frequent job changes, or retirement. According to survey results, the move rate was reported as follows: 18.2% in 2008, 15% in 2009, 12.4% in 2010, and 11.3% in 2011. In as much as this reflects an obvious trend of lower move rate over the years, and may be attributed to a number of factors, it is however not enough scientific measure to ascertain the market supply and demand for physicians. PURPOSE: The purpose of this paper is to analyze the current position of physicians, and to establish an informed/detailed study of the trends. The research will also establish a theoretical framework of these trends, and their relatedness to the law of Demand and Supply with a focus on physicians. This review will among other things, institute recommendations. DEMAND DETERMINANTS The Law of Demand: As an initial approach, the analysis in this research paper will not be far-reaching if the concept of Demand is not critically examined. Demand has been defined in Economics as the goods and services people are willing and able to buy during a certain period of time at various prices, holding all other relevant factors constant. A simple way to explain this would be to use an everyday example of say - a café. If for instance...

Words: 1822 - Pages: 8

Premium Essay

Econ

...Econ 371 Development Economics Homework 1 Due on Feb 9th, 12:30pm. You may discuss the assignment with your classmates but you are expected to complete and write up the homework independently. If you use online materials or from sources other than the assigned video and the lecture notes, then you must list your references. 1. The Many Faces of Underdevelopment Health conditions (for example, life expectancy and infant mortality rate) in an economy are an important aspect of economic development. 1) How is life expectancy correlated with the income level? Does this imply that better health conditions are the cause of a high level of income? Explain. Life expectancy is positively correlated with the income level. This does not imply that better health conditions are the cause of a higher level of income, because correlation does not imply causality. For example, the positively correlation between life expectancy and the income level may because a) better health conditions lead to higher income, or b) higher income lead to better health conditions, or c) something else cause both better health conditions and higher income. 2) According to basic growth models, do better health conditions contribute to higher income levels? Explain. Yes. Better health conditions means higher accumulation of human capital in an economy. According to the endogenous growth models, human capital is one type of capital. In basic growth models, capital accumulation is one of the driving forces...

Words: 1794 - Pages: 8

Premium Essay

Econ

...In these you include banks, investment banks, wall street. If in a country if it easy to barrow, people will buy more, then companies will produce more, then the standard of living will go up. In order for consumers to buy, we barrow. If we are able to barrow, we buy more. Why are they important? The financial sector makes barrowing and lending easier Most important part of financial sector? Banks Most important funcfion Medium of exchange You give $1, you get a coke. Buying and selling You leave $20 bill in your drawer for a few months, you will be able to buy a similar amount of goods after the few months with the same amount of money. For these months, the $20 bill provided you with a service. It stored value for you. Store of value What are the functions of money? Americans take this for granted. In other countries their money sometimes does not provide this service. Maybe a $20 book in march cost $22 in august. Whenever there is inflation, money loses it's purchasing power. When there is rapid inflation, money will lose its value rapidly. At lunch I want to buy a sandwich. I'll probably need $5 for the sandwich and $1 for a drink. Okay $6. Ah too expensive. Choose to eat somewhere else. We use dollar to make calculations in our mind. It helps us compare value. What are financial sectors? Until of account You didn't buy anything in this process. But you used it to compare value. What do we use in the financial sector? Money If a society accepts an object as a medium...

Words: 2975 - Pages: 12

Premium Essay

Econ

...ECON 11026 Assignment Item 1 . S0183732 Part A Q1ai) Article can be found in the following website : http://www.skynews.com.au/businessnews/article.aspx?id=738928&vId= The article ‘ Strong jobs figures put rate cut in doubt’ described that there is an increase in employment in the last one month which might help in putting hold to rate cut by Reserve Bank of Australia. There are positive signs in Australian job market with increase in 44000 employed people showing signs of recovery and better production levels. This will also increase private consumption giving rise to increased demand. Q1aii) This news article describes tradeoffs between interest rate cuts, inflation rate and unemployment rate. Q1aiii) First of all, this news article discusses the strong revival in the Australian job market seen in the month of March. More than 44000 jobs were created in the month of March across the nation which showed great signs of growth and production. It also says that unemployment rate is steady at the rate of 5.2 percent. The increase in number of jobs surpassed all the expectations of economists which estimated it to be 5000 in the month due to 15000 lost jobs in the month of February. Economists now estimate that due to strong job market and higher production levels, Reserve Bank of Australia (RBA) may undermine expected interest rate cuts. It had managed to keep cash rate at 4.25 percent but hinted at possible rate cuts in the month of...

Words: 4435 - Pages: 18

Premium Essay

Econ

...THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ECONOMICS ECON 1203 BUSINESS AND ECONOMIC STATISTICS FINAL EXAMINATION SESSION 1, 2013 1. TIME ALLOWED – 2 HOURS    2. READING TIME – 10 MINUTES    3. TOTAL AVAILABLE MARKS – 60      4. TOTAL NUMBER OF QUESTIONS – 3      5. PLEASE ATTEMPT ALL QUESTIONS. QUESTIONS ARE NOT OF EQUAL VALUE.    6. THE FIRST TWO QUESTIONS ARE EACH WORTH 18 MARKS. THE THIRD QUESTION  IS WORTH 24 MARKS. MARKS FOR PARTS OF QUESTIONS ARE SHOWN.     7. ON THE FRONT OF YOUR ANSWER BOOK, WRITE THE NUMBER OF EACH  QUESTION YOU HAVE ATTEMPTED.    8. STATISTICAL TABLES AND USEFUL FORMULAE ARE PROVIDED AT THE END OF  THE EXAMINATION PAPER.    9. ALL ANSWERS MUST BE WRITTEN IN PEN. PENCILS MAY BE USED ONLY FOR  DRAWING, SKETCHING OR GRAPHICAL WORK.    10. CANDIDATES MAY BRING THEIR OWN NON‐PROGAMMABLE CALCULATOR TO  THE EXAM.    11. THIS PAPER MAY BE RETAINED BY THE CANDIDATE.    Question 1 [18 marks in total]   The  Human  Resource  Department  of  a  large  company  routinely  surveys  staff  and  amongst the list of questions asked typically includes the number of hours of exercise  they participated in per week and their level of job satisfaction on a scale of 0 to 100  where 0 is the lowest and 100 the highest level of satisfaction. Past experience based on  many surveys has demonstrated that hours of exercise has a mean of 3.5 hours and a  standard deviation of  4.5 hours while  job satisfaction has a mean of 75 and a standard  deviation of  9.    (i) Th...

Words: 9131 - Pages: 37

Free Essay

Econ

...1) For a maximizing individual, he will not pay more than he is willing to pay for a good. Hence, his marginal valuation of a good determines the maximum amount of other goods that he is willing to pay in order to obtain an additional unit of the good. As long as his marginal valuation is higher than the actual amount paid, he will continue to buy the good concerned. At the margin, he will pay the maximum of what he is willing to pay, otherwise his behavior would be inconsistent with maximization. Hence, what he pays at the margin his marginal valuation.   When allocating one’s scarce resources, one has to incur cost whatever his decision will be. As cost is defined as the ‘highest-valued option forgone, whenever there is an option, there will be cost. However, since one’s resources can only be allocated to one use at one time, though there may be many options available, the cost of one’s activity is not equal to the sum of the options forgone. Hence, in deciding the cost of one’s action, only the highest-valued option forgone is considered as the cost of one’s action. This is because only this option is relevant in one’s decision making. Anything less than this highest sacrifice is irrelevant for decision making as even one does not choose the prevailing option, he will not choose an option which is not the highest-valued one. 2) Cost is the defined as the highest-valued option forgone for an action. Cost exists whenever options exist for an action. As there are many...

Words: 1110 - Pages: 5