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Econ > Economics Course Guide > Flashcards

Economics Course Guide Flashcards

1
Q

Micro

Non-price determinats of demand

A
  • Income
  • Tastes and preferences
  • Future price expectations
  • Price of related goods
  • Number of consumers
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2
Q

Micro

Assumptions underlying the law of supply (HL)

A
  • The law of diminishing marginal returns
  • Increasing marginal costs
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3
Q

Micro

Non-price determinants of supply

A
  • Changes in costs of factors of production
  • Prices of related goods
  • Indirect taxes and subsidies
  • Future price expectations
  • Changes in technology
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4
Q

Micro

Business objectives (HL)

A
  • Profit maximization
  • Alternative business objectives
    1. Corporate social responsibility
    2. Market share
    3. Satisficing
    4. Growth
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5
Q

Micro

Determinants of PED

A

Number and closeness of substitutes, degree of necessity, proportion of income spent on the good, and time

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6
Q

Micro

YED

A
  • Positive YED are normal goods and negative YED are inferior goods
  • YED less than 1 are necessities and YED greater than 1 are services and luxury goods
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7
Q

Micro

Determinants of PES

A

Time, mobility of factors of production, unused capacity, ability to store, rate at which costs increase

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8
Q

Micro

Reasons for government intervention in markets

A
  • Earn government revenue
  • Support firms
  • Support households on low incomes
  • Influence level of production
  • Influence the level consumption
  • Correct market failure
  • Promote equity
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9
Q

Micro

Main form of government intervention in markets

A
  • Price controls (price ceilings and price floors)
  • Indirect taxes and subsidies
  • Direct provision of services
  • Command and control regulations and legislation
  • Consumer nudges (HL)
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10
Q

Micro

Government intervention in response to externalities and common pool resources

A
  • Indirect (pigouvian) taxes
  • Carbon taxes
  • Legislation and regulation
  • Education
  • Tradable permits
  • International agreements
  • Collective self-governance
  • Subsidies
  • Government provision
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11
Q

Micro

Strengths and limitations of government policies to correct externalities and approaches to managing common pool resources

A
  • Challanges involved in measurement of externalities
  • Degree of effectiveness
  • Consequences for stakeholders
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12
Q

Micro

Government intervention in response to public goods

A
  • Direct provision
  • Contracting out to the private sector
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13
Q

Mirco

Response to asymmetric information (HL)

A
  • Government responses: legislation and regulation, and provision of information
  • Private response: signalling and screening
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14
Q

Micro

Oligopoly (HL)

A
  • Collusive versus non-collusive
  • Interdependence, risk of price war, incentive to collude, incentive to cheat
  • Allocative inefficiency (market failure) simple game theory payoff matrix
  • Price and non-price competition
  • Measurement of market concentration-concentration ratios
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15
Q

Micro

Monopolistic competition (HL)

A
  • Less market power due to many substitutes-more elastic demand curve compared with monopoly
  • Allocative ineffiency (market failure)
  • Less inefficiency, more product variety
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16
Q

Micro

Advantages of large firms having significant market power (HL)

A
  • Economies of scale including natural monopolies
  • Abnormal profits may finance investments in research and development, hence innovation
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17
Q

Micro

Risks in markets dominated by one or a few very large firms

A

Risks in terms of output, price, and consumer choice

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18
Q

Micro

Government intervention in response to abuse of significant market power

A
  • Legislation and regulation
  • Government ownership
  • Fines
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19
Q

Macro

Determinants of AD components

A
  • C: consumer confidence, interest rates, wealth, income taxes, level of household indebtedness, expectations of future price level
  • I: interest rates, business confidence, technology, business taxes, level of corporate indebtedness
  • G: political and economic priotities
  • X-M: income of trading partner, exchange rates, trade policies
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20
Q

Macro

Determinants of the Short-run aggregate supply (SRAS) curve

A
  • Costs of factors of production
  • Indirect taxes
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21
Q

Macro

Variations in aggregate demand and aggregate supply

A
  • Changes in the quantity and/or quality of factors of production
  • Improvements in technology
  • Increases in efficiency
  • Changes in institutions
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22
Q

Macro

Macroeconomic objectives

A
  • Economic growth
  • Low unemployment
  • Low and stable rate of inflation
  • Sustainable level of government (national) debt (HL)
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23
Q

Macro

Consequences of economic growth

A
  • Impact on living standards
  • Impact on the enviornment
  • Impact on income distribution
24
Q

Macro

Potential conflic between macroeconomic objectives

A
  • Low unemployment and low inflation
  • Trade-off between unemployment and inflation (Phillips curve - HL)
25
Q

Macro

Causes of economic inequality and poverty

A
  • Inequality of opportunity
  • Different levels of resource ownership
  • Different levels of human capital
  • Discrimination (gender, race and others)
  • Unequal status and power
  • Government tax and benefits policies
  • Globalisation and technological change
  • Market-based supply side policies
26
Q

Macro

The role of taxation in reducing poverty, income and wealth inequalities

A
  • Progressive, regressive and proportional taxes
  • Direct taxes (personal income, corporate income, wealth)
  • Indirect taxes
27
Q

Macro

Further policies to reduce poverty, income and wealth inequality

A
  • Policies to reduce inequalities of opportunities/investment in human capital
  • Transfer payments
  • Targeted spending on goods and services
  • Universal basic income
  • Policies to reduce descrimination
  • Minimum wages
28
Q

Macro

Goals of monetary policy

A
  • Low and stable rate of inflation
  • Low unemployment
  • Reduce business cycle fluctuations
  • Promote a stable economic enviornment for long-term growth
  • External balance
29
Q

Macro

Constraints of monetary policy

A
  • Limited scope of reducing interest rates, when close to zero
  • Low consumer and business confidence
30
Q

Macro

Stregths of monetary policy

A
  • Incremental, flexible and easily reversible
  • Short time lags
31
Q

Macro

Goals of fiscal policy

A
  • Low and stable inflation
  • Low unemployment
  • Promote a stable economic enviornment for long-term growth
  • Reduce business cycle fluctuations
  • Equitable distribution of income
  • External balance
32
Q

Macro

Constrains on fiscal policy

A
  • Political pressure
  • Time lags
  • Sustainable debt
  • Crowding out (HL)
33
Q

Macro

Strengths of fiscal policy

A
  • Targeting of specific economic sectors
  • Government spending effective in deep recession
34
Q

Macro

Goals of supply-side policies

A
  • Long-term growth by increasing the economy’s productive capacity
  • Improving competition and efficiency
  • Reducing labor costs and unemployment through labor market flexibility
  • Reducing inflation to improve international competitiveness
  • Increasing firms’ incentives to invest in innovation by reducing costs
35
Q

Macro

Market-based policies

A
  • Policies to encourage competition: deregulation, privatization, trade liberalization, anti-monopoly regulation
  • Labor and market policies: reducing the power of labor unions, reducing unemployment benefits, abolishing minimum wages
  • Incentive-related policies: personal income tax cuts, cuts in business tax and capital tax gains
36
Q

Macro

Interventionist policies

A
  • Education and training
  • Improving quality, quantity and access to health care
  • Research and development
  • Provision of infrastructure
  • Industrial policies
37
Q

Macro

Constraints on supply-side polices

A
  • Market based: equity issues, time lags, vested interests, enviornmental impacts
  • Interventionist: costs, time lags
38
Q

Macro

Strengths of supply side policies

A
  • Market based: improved resource allocation, no burden on government budget
  • Interventionist: direct support of sectors important for growth
39
Q

Global

Benefits of international trade

A
  • Increased competition
  • Lower prices
  • Greater choice
  • Acquisition of resources
  • More foreign exchange earnings
  • Access to larger markets
  • Economies of scale
  • More efficient resource allocation
  • More efficient production
40
Q

Macro

Arguments for/advantages of trade protection

A
  • Protection of infant industries
  • National security
  • Health and safety
  • Enviornmental standards
  • Anti-dumping
  • Unfair competition
  • Balance of payments correction
  • Government revenue
  • Protection of jobs
  • Economically least developed country (ELDC) diversification
41
Q

Global

Arguments against/disadvantages of trade protection

A
  • Misallocation of resources
  • Retaliation
  • Increased costs
  • Higher prices
  • Less choice
  • Domestic firms lack incentive to become more efficient
  • Reduced export competitiveness
42
Q

Global

Advantages of trading blocs

A
  • Trade creation (HL)
  • Greater access to markets offer potential for economies of scale
  • Greater employment opportunities
  • May allow for stronger bargaining power in multilateral negotiations
  • Greater political stability and cooperation
43
Q

Global

Disadvantages of trading blocs

A
  • Trade diversion (HL)
  • Loss of sovereignty
  • Challange to multilateral negotiations
44
Q

Global

Advantages of monetary union (HL)

A
  • Foster greate trade
  • Economic integration
  • Price transparency
45
Q

Global

Disadvantages of monetary union (HL)

A
  • Loss of monetary policy independence
  • Vulnerability to asymmetric shocks
46
Q

Global

Obectives of WTO

A
  • Raise living standards
  • Create jobs
  • Improve people’s lives
47
Q

Global

Factors of changes in demand and supply for currency

A
  • Foreign demand for exports
  • Domestic demand for imports
  • Inward/outward foreign direct investment
  • Inward/outward portfolio investment
  • Remittances
  • Speculation
  • Relative inflation rates
  • Relative interest rates
  • Relative growth rates
  • Central bank intervention
48
Q

Global

Components of the balance of payments

A
  • Current account: balance of trade in goods, balance of trade in services, income, current transfers
  • Capital account: capital tranfers, transaction in non-produced, non-financial assets
  • Financial account: foreign direct investment (FDI), protfolio investment, reserve assets, official borrowing
49
Q

Global

Methods to correct a persistent current account deficit (HL)

A
  • Expenditure switching
  • Expenditure reducing
  • Supply-side polices
50
Q

Global

Measuring development: single indicators

A
  • GDP/GNI per capita at PPP
  • Health and eduaction indicators
  • Economic/social inequality indicators
  • Energy indicators
  • Enviornmental indicators
51
Q

Global

Measuring development: composite indicators

A
  • Human Development Index (HDI)
  • Gender Inequality Index (GII)
  • Inequality adjusted Human Development Index (IHDI)
  • Happy Planet Index
52
Q

Global

Economic barriers

A
  • Rising economic inequality
  • Lack of access to infrastructure and appropriate technology
  • Low levels of human capital-lack of access to healthcare and education
  • Dependence on primary sector production
  • Lack of access to international markets
  • Informal economy
  • Capital flight
  • Indebtedness
  • Geography including landlocked countries
  • Tropical climates and endemic diseases
53
Q

Global

Political and social barriers

A
  • Weak institutional framework: legal system, ineffective taxation structures, banking system, property rights
  • Gender inequality
  • Lack of good governance/corruption
  • Unequal political power and status
54
Q

Global

Strageties to promote economic growth and/or economic development

A
  • Trade strageties: import substitution, export promotion, economic integration
  • Diversification
  • Social enterprise
  • Marker-based policies: trade liberalization, privatization, deregulation
  • Interventionist polices: redistribution policies including tax polices, tranfer payments and minimum wages
  • Provision of merit goods: education programs, health programs, infrastructure
  • Inward foreign direct investment
  • Foreign aid: humanitarian aid/development aid, debt relief, Official Development Assistance (ODA), non-governmental organizations (NGOs)
  • Multilateral development assistance: the world bank, international monetary fund
  • Institutional change: improved access to banking, increasing women’s empowerment, reducing corruption, property rights, land rights
55
Q

Global

Functions of the WTO

A
  • Trade negotiations
  • Promoting fair competition
  • Facilitation of trade
56
Q

Global

Functions of the IMF

A
  • Financial assistance
  • Policy advice
  • Surveillance
57
Q

Global

Functions of an NGO

A
  • Plan and implement specific projects in developing countries.
  • Act as a lobbyist to influence public policy in poverty reduction, workers’ rights, human rights, and the environment.

Econ (4 decks)

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