Basic Econs Flashcards
Harrod-Domar Model:
What does it explain?
The role of capital accumulation to drive the economy. (Firms need funds to buy factories and equipment, government need to make sure banks and financial markets are table enough for people to put funds in them)
What is the difference between GDP and RGDP?
GDP: Price x Quantity
RGDP: Total value of goods and services, adjusted for inflation
What are the three methods for measuring RDGP?
Income, Spending, Production
Why do economist focus on Asia?
East and Southeast Asia countries faced spectacular growth with a growing middle class.
Economists, policy makers like to consider the factors that brought the economic success of these Economies; At the same time, firms can only consider how to expand their business to capture the emerging new markets
One of the key factors for sustainable economic growth is
High capital accumulation with technological progress which drives up labour productivity
Solow’s Growth Model explains:
The role of capital accumulation in the short run and the role of technology in the long run. (Increase capital up to a certain point then pivot to developing technology to avoid diminishing returns)
The law of diminishing returns occurs
In the short run when the firm increases the use of one input and keep the other inputs unchanged
Formula for calculating Economic Growth
((Current RGDP - Previous RGDP)/Previous RGDP)) x 100
Cobb Douglas Formula
Y = A(K)½ (L)½ or A√KL
What issue may account for the errors in computing a country’s GDP
Freelancers with under-declared income
Students working part timers in Food & Beverage outlets
Presence of goods smuggling
Appearance of E-Commerce
Timeline test (Super impt for Case Study 2 in Exam)
- After WW2:
- Asian Financial Crisis
- Global Financial Crisis
- Covid-19 Pandemic
- After WW2: 1945 - 1970
- Asian Financial Crisis: 1997-1998
- Global Financial Crisis: 2008 - 2011
- Covid-19 Pandemic: 2019 - 2022
