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Logan McMinn - Economics Final Coggle - May 8th, 2018 (Recession and…
Logan McMinn - Economics Final Coggle - May 8th, 2018
Basics of Economics
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Diminishing Marginal Utility: The satisfaction after repeating an event multiple time decreases in a linear fashion
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Incentives: A benefit of a certain choice,.
Incentives: A benefit, can be used as positive or negative depending on the implication
Perverse Incentive: When you hope that an incentive will cause something positive to happen when in fact the opposite occurs
Production Possibility Curves: All the possible amounts that a company can produce of two products, the further the curve moves out, higher production levels, any point within the curve represents inefficiency
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Microeconomics: The interaction of individuals in the economy (people and companies)
Macroeconomics: The national economy as a whole, the issues that impact people and companies
Personal Financial Info
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Marginal Tax Brackets: The amount of money you earn determines the amount that the government takes away, by a bracket system
Federal Tax: Taxes taken away by the U.S. government, based on income
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FICA Taxes: Tax money taken out of all American's paychecks for Medicare/Medicaid and Social Security
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Deductions: Mandatory - FICA and State Taxes, Voluntary - Healthcare, Life Insurance, and Retirement
Payday Loans: Basically can get cash with super high interest rates mandated by the state, they are highly predatory because they are a cycle where people have to buy more payday loans to pay off the ones they got earlier, and debt builds
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Sub-Prime Mortgage: Usually granted to those will low credit scores and they jack up the interest rates, the rates can change based on payment
Consumer Financial Protection Bureau: Overseeing the financial products on the market available to consumers
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Behavioral Economics
Choice Architecture: The way that those in charge can manipulate your behavior and nudge you towards the decisions they want you to make
Libertarian Paternalism: People have the freedom to make decisions but are guided towards the best results
Nudges: A simple push for making a decision that benefits some party in any way, might make it easier to make the right choice
Humans vs. Econs: Econs are rational decision making that it is relatively easy to guess the choice they will make based on logical outcomes, humans might make gut decisions and prefer things that are sometimes irrational
Anchoring Heuristic: A number that was just referenced may serve as an anchor for a different set of information (distance between cities)
Availability Heuristic: An immediate response to a question using data that the brain has accessible in the moment, a regurgitation statement of information
Loss Aversion Bias: People avoid losses more than they are attracted to gains, it is worse to lose $5 than it is better to gain $5
Status Quo Bias: A measure of the current state of affairs and making decisions based on what is currently happening
Overconfidence/Optimism Bias: A common tendency for decision makers to overestimate the accuracy of their predictions
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