Economics
Macroeconomy
Microeconomy
opportunity cost
An Inquiry Into the Nature and Causes of the Wealth of Nations
--Adam Smith
Trade
Specialization:divison of labor
Economic system
How will we produce it
Who gets it
What will we produce
Market economies
planned economies
factors of production:land,labor and capital
Command economy
Capitalist economy
Market
Price signals
voluntary exchange
Expected effects for economic policies
Unemployment rate :
⭐Limit unemployment
Keep prices stable ⭐the inflation rate
Gross Domestic Produck(GDP)
⭐Keep the economy growing over time
Nominal GDP: Gross Domestic Product not adjusted for inflation
Real GDP: GDP adjusted for inflation
Recession :When two successive quarters, or six months, show a decrease in real GDP
Include People looking for a job actively
Discouraged Workers :Unemployed people who were looking for a job but have given up
Underemployed 不充分就业 e.g. A worker with a five hour a week part time job is considered fully employed.
Three types of unemployment
Natural rate of unemployment : The lowest rate of unemployment that a country can sustain over a long period
❌Cyclical Unemployment : Unemployment due to a recession
✅Frictional Unemployment : The time period whne a worker is searching for, or transitioning from one to another
Business Cycle : The process of booms and busts of economy
Inflation is measured by trakcing the prices of a set amount of commonly purchased items
✅Structural Unemployment : Unemployment caused by lack of demand for a worker's specific type of labor
Infaltion : An increase in a currency supply relative to the nnumber of people using it, resulting in rising prices of goods and services over time
Deflation : A decrease in the general privce level of goods and services
Four making-up components
Government spending
Cosumer spending
Net exports
Business spending
Productivity
HDI : The United Nations' Human Development Index -- measures life expectancy, literacy, education, quality of life
GDP per capita :GDP of a contury divided by its population
Factor of production :
Labor
Capital
Natrual resources
machines & factories & infrastucture
Human capital -- workers' knowledge & skills
Technology (economics) : The sum total of knowledge & information that society has acquired concerning the use of resources to produce goods and services
-- Combine labor & capital
Connectivity = Productivity
Inflation
Consumer basket
Cosumer price index : A statistical estimate constructed using the prices of a sample of representive items whose prices are collected periodically
Purchasing power
Definition : An increase in a currency supply relative to the number of people using it, resulting in rising prices of goods and services over time
BUbbles
Definition : A market phenomenon characterized by surges in asset prices to levels significantly above the fundamental value of that asset
Real : Prices has been adjusted for inflation ; Nominal : hasn't
Demand pull inflation
Cost push inflation -- deficiency of productive resources
Speculation (投机)
Fiscal Policy : The way a government adjusts its spending levels and tax reates to monitor and influence a nation's economy
Contractionary fiscal policy (紧缩性财政政策) : enacted by a government to reduce the money supply and ultimately the spending in a country
Expansionary fiscal policy (扩张性财政政策) : stimulates the economy during or in anticipation of a business-cycle contraction --- confront with a deep recessionary gap (衰退缺口)
John Maynard Keynes -- basically invented modern economics and developed theories about spending and production. -- suggested using expansionary fiscal oplicy to speed up economy
Deficit Spending (财政赤字) : The government spending more money than it collects in tax revenue
Corwding Out (挤出效应) : Where increasd public sector spending replaces, or drives down, private sector spending -------- (keynesian economists maintaining) only a problem in fully operated economy
Austerity : Rising taxes and cutting government sending to reduce debt
Multiplier effect (乘数效应): ripple effect -- initial spending of $100 may turn out to be $175 in the economy called a multiplier of 1.75
e.g. walfare & unemployment the hignest -- low income people are more likely to spend all their additional income infrastructure & aid & local governments 1.5X multiplier cuts to payroll & income taxes 1X multiplier
strong economy 1X multiplier recession 2X multiplier