Economics

Economics

1. Macro Economy

   • Econ growth(GDP)/Econ development(SOLs) S5L1
     • Econ growth: an increase in real national income of an economy a time period, usually on year. Econ development: the process of improving people's economic well-being and quality life.
     • Sustainability
       • The needs of the present can be met without imposing costs on future generations.
     • Actual growth(move within PPC curve) SR
       • the percentage annul increase in national output actually produces.
     • Potential growth(shift of PPC curve) LR
       • the percentage annul increase in the capacity of the economy to produce.
       • output gap
         • the difference between actual and potential output. Positive if actual>potential Negative if actual
     • business cycle
       • A business (trade or economic) cycle describes the rise and fall in production output of goods and services in an economy.
     • Factors leading to econ growth
       • 1.More FOPs 2.Higher efficiency of using these FOPs i.e. Natural resources; Investment; Rate of savings; Edu&Training; Labour productivity or labour participation rate; Tech improvement; Better institutions
     • Pros of econ growth
       • 1. More G&S available for people to enjoy 2. Higher income 3. HIgher tax revenue, better social welfare schemes 4. Rise in employment 5. Increase consumer and business confidence
     • Cons of econ growth
       • 1. Environmental damage 2. Current loss of consumer goods in exchange for more capital goods in the future 3. Increased working hours 4. Depletion of natural resources
     • National debt
       • National debt is the total debt of the government. It is sometimes expressed as a percentage of GDP. A budget deficit adds to the national debt whereas a budget surplus reduces the national debt.
       • Disadvantages of national debts
         • 1. Opportunity costs. Tax revenue used to pay interest on the debt could have been used for other purposes. 2. It is made difficult for the government to attract lenders.
   • Measuring National income S4L2
     • the total income for an economy
     • GDP(Gross Domestic Product)
       • the market value (nominal) of all final goods and services produced within a country in a given period of time.
     • GNI/GNP(Gross National Income/Product)
       • the total output produced by a country's citizens wherever they produce it. 英国人在中国赚的钱不算中国的GNP，但是中国人在英国赚的钱算GNP
       • GNP=GDP+net property income from abroad
         • Net property income from abroad: consists of the inflow of interest, profits and dividends into a country minus the outflow.
       • GNP-Depreciation=NNP
         • Depreciation: a figure used to measure the fall in value of the capital stock of a country.
     • Indicators of living standards of economic development
       • Human Development Index(HDI)
         • a mean of measuring countries' economic and social development using life expectancy, years of schooling and GNI per capita
       • Measure of Economic Welfare(MEW)
         • starts with GDP but adds the value of leisure time and the amount of unpaid work in an economy and subtracts the value of environment damage caused by industrial production and consumption.
       • Multidimensional Poverty Index(MPI)
         • a measurement of poverty based on health, education and living standards
     • Problems of using GDP
       • When comparing NI within a country
         • 1.GDP understates NI because the value of non-traded output is not included 2.GDP figures understate NI because they do not include the black market activity3.GDP ignores the distribution of income4.GDP ignores leisure time and working hours5.GDP ignores changes in life expectancy6.GDP ignores the effects of externalities
       • When comparing living standards between countries
         • Difficult to convert real GDP into a common currency Use PPP
     • Kuznets curve
       • Kuznets curve is an inverted U-shaped curve with inequality or Gini coefficient on the y-axis and economic development, time or per-capita income on the x-axis
   • Developing/Developed countries S5L2
     • Developing countries: economies with  low GDP per head Developed countries: economies with high GDP per head
     • Population growth
       • developing countries high developed countries low
       • optimum population
         • The optimum population is said to exist when output per head is the greatest, given existing quantities of the other factors of production and the current state of technical knowledge
     • Income distribution
       • developing countries: income is unevenly distributed developed countries: lower level of inequality than the other groups
     • Unemployment
       • developing countries: higher unemployment developed countries: lower unemployment
     • Economic structure
       • developing countries: high proportion of primary sector developed countries: high proportion of secondary and tertiary sector
     • Foreign direct investment
       • improve visible trade balance worsen invisible trade balance
     • trade not aid
       • The economic idea that the best way to promote economic development, is through promoting free trade and not providing direct foreign aid
   • Labour force
     • 其实题目是unemployment 但是这样方便看出包含关系 Labour force: The labour force consists of all those people who are eligible for work and are either employed or unemployed.
     • The labour force consists of all those people who are eligible for work and are either employed or unemployed.
     • Working population
       • Working population is the number of people who are willing and eligible to work.
     • Factors affecting labour force
     • Factors affecting the size of the labour force
       • Population size Birth/Death rates School leaving age Retirement age No. of people in post-school education
     • Working age population
       • 16-6x岁的法定可以工作的人
       • Working population
         • Working population is the number of people who are willing and eligible for work.
         • Unemployment S5L3
           • Unemployment is defined as those of working age who are able and willing to work but cannot find a job. Unemployment rate= The number of people unemployed/the number of labour force
           • Disequilibrium unemployment
             • Disequilibrium unemployment is result from real wages in the economy being above the equilibrium level. (aggregate supply of labour exceeds aggregate demand for labour)
             • Real-wage disequilibrium
               • Trade union power pushes up wage rates Government sets minimun wage
             • Demand deficient/ cyclical unemployment
               • It caused by a deficiency of aggregate demand. There is simply not enough demand in the economy to provide jobs for everybody who wants one. It is also sometimes referred to as cyclical unemployment as it occurs during the slump phase of the economic cycle. 
             • Growth in labour supply
             • These unemployment are somehow caused by 'sticky wages'
               • According to the theory, when unemployment rises, the wages of those workers that remain employed tend to stay the same or grow at a slower rate than before rather than falling with the decrease in demand for labor. Specifically, wages are often said to be sticky-down, meaning that they can move up easily but move down only with difficulty.
           • Equilibrium unemployment/ Natural rate of unemployment
             • Natural rate of unemployment, sometimes called the non-accelerating rate of unemployment, is where the rate of inflation is unchanging because the aggregate demand for labour equals the aggregate supply of labour leading to no upward pressure on wage rates and thus inflation
             • Frictional unemployment
               • Refer to those people who are temporarily unemployed because they are in the process of changing jobs or looking for a new job.
             • Structural unemployment
               • Unemployment that arises from mismatch between the demand for and the supply of labour. People made redundant in one part of the economy cannot immediately take up jobs in other industries.
             • Technological unemployment
             • Determinants of NAIRU
               • Education and skills Availability of job information Degree of labour mobility
           • Consequences of unemployment
             • Economic costs( lost output, lost skills Fall in SOLs Financial costs( lost tax revenue, unemployment benefits) income inequality Social instability
         • Employed people
       • Dependence ratio
         • Dependent population/working age population
       • Dependent population
         • people below 16 or people above 6xx
     • The labur force participation force
       • The labour force participation rate refers to the percentage of the total population of working age (16-6x) who are actually classified as bing part of the labour force.
     • Labour productivity
       • Labour productivity refers to the quantity of goods and services that a worker is able to produce in a given period of time.
       • Factors influencing labour productivity
         • Education Skills Training Experience Technical knowledge Motivation

2. Basic economic ideas and resource allocation

   • Supposed to be taught by John Coates, but I did not think that he has taught this. Supposed to be macro econ, but I'd prefer give an independent tab to this topic
   • Allocative efficiency
     • Allocative efficiency arises when resources are allocated to produce the right products in the right quantities. (P/AR=MC)
   • Productive efficiency
     • Productive efficiency arises when products are made with the least possible quantity of resources and the lowest cost methods.(In the economy) A firm may be described as productively efficient if it is producing at the lowest point on the long run average cost curve.
   • Pareto optimality
     • Pareto optimality occurs when it is not possible to make someone better off without making someone else worse off.
   • Market failure
     • Market failure occurs when the free market forces of demand and supply do not achieve an efficient allocation of resources.
     • Causes of market failure
       • Externalities. A lack of competition Information failure

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