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Economics (Microeconomics (Price Theory: Supply and Demand (Demand…

- - - - Population
      - Income
      - Price of Related Good
      - Expectations about future prices
      - Consumer Info
      - Tastes, preferances
    - - Number of sellers in area
      - Costs of production
      - Technological change
      - Future expectation of prices
    - - % change in Q /
        % change in P
      - PED > 1 elastic demand
        PED < 1 inelastic demand
      - PED = 1 unit elasticity
      - Factors
        
        Close substitutes?
        Good = neccessity? or luxury?
        Income
        Time horizon
    - - Price Ceiling:
        below E pt
      - Price Floor:
        above equilibrium pt
  - - - Gross Pay:
        before deductions :smiley:
      - Net Pay:
        after deductions :unamused:
      - Deductions
        
        Mandatory
        
        Federal tax
        
        Marginal tax brackets
        
        FICA tax
        
        Medicare, Social Security
        
        State tax
        
        Voluntary
        
        Ex: union, eco pass, insurance
    - - FICO Score:
        a measure of consumer credit risk
      - Payday Loans
      - Fixed rate mortgage = safe
      - Subprime Mortage = risky, bad
- - - - Frictional: ppl between jobs
        Structural: jobs become obsolete
        Cyclical: recession
    - - Primary:
        raw materials
      - Secondary:
        manufacturing, processing materials
      - Tertiary:
        moving, trading, selling
      - Underground:
        illegal production, black market, also stuff like babysitting & lawnmowing (unofficial stuff)
  - - - Expansionary:
        more $ from gov, lower taxes, fights high unemployment
      - Contractionary:
        fights inflation, high taxes, less spending
      - Debt vs Deficit:
        Deficit = federal spending - revenue
        Debt = total borrowing over years of deficits
    - - can increase $ in circulation by giving some to banks and lowering interest rates
      - Multiplier = 1/(1-MPC)
      - change in GDP = change in spending x Multiplier
      - Tools of the Federal Reserve
        
        change discount rate (interest rate paid by banks)
        
        change reserve requirements
        
        open market operations:
        Fed buys and sells Treasury bonds (IOUs)
        
        pay banks interest on excess reserves
      - Dual Mandate:
        
        maximize sustainable employment
        
        maintain stable prices
    - - Mortgage Backed Security: collection of mortgages
      - Credit Default Swap: seller of the CDS will compensate the buyer in the event of a debt default
    - - Keynes
        
        recession caused by animal spirits:
        bull and bear = confidence and fear fairies
        
        paradox of thrift: ppl hold their $ because they're scared but it makes the problem worse
      - Hayek
        
        government intervention makes recessions worse
        
        gov help just creates artificial booms (sugar high)