Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Lecture/seminar/reading content notes > Economics - Lecture/seminar notes > Flashcards

Economics - Lecture/seminar notes Flashcards

(From slides/readings)

1
Q

Main topics of economics…

(Wk 1/Term 2)

A
  • Consumption e.g. social factors which affect consumer preferences + Consumer behaviour
  • Production e.g. How firms orgainse production activities + Firms’ deveopment e.g. R&D + How firms compete/co-operate together
  • Macroeconomy e.g. aggregate lvls of consumption etc
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Other main topics of economics…

(Wk 1/Term 2)

A
  • International trade, investment and production
  • Economic development
  • Environment
  • Reproductive economy
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Some schools of economics…

(Wk 1/Term 2)

A
  • Classical
  • Neoclassical
  • Marxist
  • Keynesian
  • Schumepeterian
  • Austrian
  • Institutionalist (Old and New)
  • Behaviouralist
  • Developmentalist

(Smaller schools involce Neo-Ricardian, Ecological etc)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Where does the word ‘economy’ come from?

(Alongside the study of it)

(Wk 1/Term 2)

A
  • Comes from a Greek word for “one who manages a household
  • Economics is the study of how society manages its scarce resources.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is equity?

(Wk 1/Term 2)

A
  • Equity means the benefits of those resources are distributed fairly among the members of society.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

1st five principles of economics…

(TORPT)

(Wk 1/Term 2)

A
  • Trade-offs
  • Opportunity cost
  • Rational People think at the margin (small, incremental comparisons may be made).
  • People Respond to Incentives (people choose the thing which has its marginal benefits > marginal costs).
  • Trade can make everyone better off -> (people gain from their ability to trade with one another e.g. allows specilisation)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

2nd five principles of economics…

(Wk 1/Term 2)

A
  • Markets are usually a good way to organise economic activity + Households decide what to buy and who to work for + ‘The invisible hand’
  • Governments Can Sometimes Improve Market Outcomes -> Market failure occurs when the market fails to allocate resources efficiently. + When the market fails (breaks down) government can intervene to promote efficiency and equity
  • Living standards depends on a country’s production -> They can be measured by comparing personal incomes or comparing total market value of nation’s production
  • Inflation (when the govt. prints too much money) + Short-run trade-off between inflation and unemployment

(A market economy is an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

‘The invisible hand’…

(Price mechanism things)

(Wk 1/Term 2)

A
  • Because households and firms look at prices when deciding what to buy and sell, they unknowingly take into account the social costs of their actions.
  • As a result, prices guide decision makers to reach outcomes that tend to maximize the welfare of society as a whole.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Definitions of economics…

(Wk 1/Term 2)

A
  • The Economist’s Dictionary of Economics defines economics as:
    ‘The study of the production, distribution and consumption of wealth in human society.’
  • EconomistLionel Robbins said in 1935 that:
    ‘Economics is a social science that studies human behaviour as a relationship between needs and wants and scarce means, which have alternative uses.’
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

The basic economic problem…

(Wk 1/Term 2)

A
  • Satisfying unlimited wants and needs with limited resources
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Who first identified economics?

(Wk 1/Term 2)

A
  • First identified by Aristotle (384-322 BC) in his major work The Politics.
  • He also identified another activity, chrematistike -> involving the making and lending of money, wealth accumulation, commerce and earnings.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Define opportunity cost…

(Wk 1/Term 2)

A
  • The next best alternative foregone when a choice is made
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Difference between positive statements and normative statements…

(Wk 1/Term 2)

A
  • Positive statements are objective, factual and can be tested
  • Normative statements are opinionated, subjective and carry value judgements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Needs, wants and choice…

(Wk 1/Term 2)

A

Needs:
Human needs are material items people need for survival, such as food, clothing, housing and ware.
Wants:
Human wants are the driving force which stimulates demand for goods and services. To curb the economic problem, organise production to satisfy as many wants as possible.
Choice:
The economic problem fundamentally revolves around the idea of choice, which ultimately must answer the problem

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Interdisciplinity…

(Wk 1/Term 2)

A
  • interdisciplinarity is about how different fields of knowledge (disciplines) can be interrelated.
  • It is very important to see that Economics and Law can be interrelated in a broader global context.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Endogenous money…

(Wk 2/Term 2)

A
  • The key principle of endogenous money is that the quantity of money is not fixed and is not determined by the central bank.
  • Every time a commercial bank makes a loan, it provides money that may be spent in the real economy.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

How do loans create demand in the economy?

(Wk 2/Term 2)

A
  • Loans create deposits
  • deposits circulate through banking system -> creating demand for reserves/base money

(Deposits fund credit creation)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Monetary control…

(Wk 2/Term 2)

A
  • Central bank targets price of reserves/liquidity
  • Shapes short, long-term interest rates, aggregate demand + inflation
  • Macroprudential policy: contain systemic risk
  • Banking crises: lender of last resort
19
Q

How do global banks lend?

(Wk 2/Term 2)

A
  • They lend via cross-border banking markets
  • Foreign ownership: subsidiaries and branches (internal capital markets)
  • Banking crises and internal capital markets
20
Q

Basel III things…

(Regulations put in place after the 2007-2009 financial crisis)

(Wk 2/Term 2)

A
  • Leverage ratio – a ‘backstop’ measure = at least 3%
    Roughly, (Tier 1)/(Total Exposure)
    TE - without reference to RWAs.
  • Liquidity coverage ratio (LCR)
    High Quality Liquid Assets / 30 Days Net Cash Outflows ≥100%
  • Net Stable Funding Ratio (NSFR): stable funding over a one-year horizon
  • NSFR equation: Available stable funding / Required stable funding ≥100%

(Tier 1 measures a bank’s core capital relative to its total assets)

Risk-weighted assets determine min. amount of capital a bank must have in relation to risk profile of its lending activities and other assets -> to reduce risk of insolvency and protect depositors

21
Q

Global banking crises…

(Wk 2/Term 2)

A
  • Cross-border banking loans “destabilizing … floods and draughts”
  • Global banks as superspreaders of systemic risk
  • Internal capital markets: increase transmission of risks between home/host
  • Search for yield and global banking glut
22
Q

Demand-side policies…

(Fiscal policy and monetary policy)

(Wk 2/Term 2)

A

Fiscal:
- Taxes
- Expenditure
Monetary:
- Interest rates
- Money supply

23
Q

Which leaders were notably influenced monetarist policies?

(Wk 2/Term 2)

A
  • Monetarist policies greatly influenced the British PM Margaret Thatcher (1979-1990) and the US President Ronald Reagan (1981-1989).
24
Q

How is the rate of inflation measured?

(Wk 2/Term 2)

A
  • Rate of inflation measured by annual % change price lvls -> as measured by the Consumer Price Index (CPI)
25
Q

Consumer Price Index (CPI)…

(Main measure of inflation in the UK)

(Wk 2/Term 2)

A
  • BoE’s main role is to keep inflation at 2%.
  • This is the same for the European Central Bank (ECB) and countries using the Euro (€).
    The aim of this target is: to achieve a sustained period of low and stable inflation

(Low stable inflation is also known as price stability)

26
Q

Expansionary monetary policy…

(Wk 2/Term 2)

A
  • This boosts A.D in the economy
  • This is boosted via lower I.R rates, higher money supply

(To prevent deflation/disinflation)

27
Q

Monetary stimulus…

(Wk 2/Term 2)

A
  • Rise in money supply lowers I.R rate
  • Decrease in I.R rate boosts investment
  • Rise in investment boosts A.D
28
Q

Contractionary monetary policy…

(Wk 2/Term 2)

A
  • Lowers A.D in economy
  • Lowers money supply
  • Boost interest rates

(To prevent inflation/economy overheating)

29
Q

MPC things…

(Wk 2/Term 2)

A
  • They set the base rate
  • They maintain financial and monetary stability
30
Q

Basis of MPC Decisions…

(They decide on I.R rates and Q.E)

(Wk 2/Term 2)

A
  • I.R rates are main target for MPC which decides whether expansionary or restrictive monetary policy is appropriate + economic growth and employment.
  • Rate of rise of earnings as an indicator of pervasive excess demand.
  • Rate of rise in housing prices act as an indicator of inflationary pressures.
31
Q

Q.E things…

(Wk 2/Term 2)

A
  • Q.E allows a central bank to reduce the I.R
  • A monetary policy instrument where the central bank creates new money and buys financial assets (bonds) in exchange for money -> to boost lending and borrowing in the economy
32
Q

Green bonds…

(Wk 2/Term 2)

A
  • Green Bonds are to raise money for climate and environment concerns.
  • Usually asset-linked, backed by issuer’s balance sheet.
  • Therefore, they have the same credit rating as the issuer’s other debt obligations.
33
Q

Quantity Theory of Money…

(A key consideration of monetary policy)

(Wk 2/Term 2)

A
  • QTM originates in the 16th Century when influx of gold and silver from the Americas into Europe produced significant inflation.
  • (1752) David Hume stated that money supply has a direct relationship to price lvls.
  • (1802) Thornton stated that rise in money supply didn’t always mean rise in economic output. + More money was equal to more inflation.
34
Q

What do the two types of fiscal policy do?

(Wk 2/Term 2)

A

Expansionary - Boosts AD by increasing govt. spending and lowering taxation (can cause a budget deficit)

35
Q

Pros and cons of expansionary and contractionary fiscal policy…

(Wk 2/Term 2)

A

Expansionary pros - Boosts economic growth and reduces unemployment,
-> HOWEVER, possible inflation + possible current account deficit, (may be used in a recession or a negative output gap).
Contractionary pros - Lowers economic growth and increases unemployment
-> HOWEVER, it will boost price levels and cause a current account surplus, (may be used during a positive output gap or a
boom).

-> For expansionary, a current account deficit can occur as with higher income, imports rise from more purchases.
-> For contractionary, a current account surplus can occur as with lower income + imports decrease from less purchases.

36
Q

What is the current global atmospheric
temperature?

(As of 2023, according to Berkeley Earth)

(Wk 3/Term 2)

A
  • Its close to 1.5°C

(Compared to the pre-industrial average, (1850-1900)

37
Q

Scientists have shown that the rise in atmospheric
temperature is directly related to…

(Wk 3/Term 2)

A
  • Directly related to the rise in CO2 concentration
38
Q

How would a world of 3°C-4°C look like?

(Wk 3/Term 2)

A
  • Much of Southern Europe may look like the Sahara desert.
    ▪ Events such as storms and cyclones are likely to be more intense with much higher speeds.
    ▪ The North India monsoon -> which shapes the agricultural lives of hundreds of millions, would change radically.
    ▪ Water availability problems for billions of people -> especially in the Global South, will arise.
    ▪ Many coastal areas will disappear because of sea lvl rise.
39
Q

How Global North are responsible for climate change lvls…

(Global North countries have more power and wealth than other countries)

(Wk 3/Term 2)

A
  • Global North is responsible for about 70% of cumulative CO2 emissions
  • Although China currently the
    biggest emitter at global lvl -> China’s lvl of cumulative emissions much lower than current lvls CO2 flows.

(Hickel,2020)

(See GDrive docs)

40
Q

Economic effects of climate change…

(Wk 3/Term 2)

A
  • There might be continuous destructions in capital infrastructure, affecting the profitability and investment of firms.
  • Health problems and hostile environment can affect people’s ability to work -> So labour productivity might go down.
  • Regions and countries that rely on agriculture and tourism might experience significant decline in economic activity.
41
Q

Economic effects of climate change…

(Emigration, debts and financial assets)

(Wk 3/Term 2)

A
  • Emigration in countries with severe climate change problems might increase significantly.
  • Defaults on debt might rise due to people’s and companies’ inability in affected regions to repay their debt.
  • Due to high uncertainty, people might increase their saving and they might stop risky investments -> which can destabilise financial markets.
42
Q

Economic strategies for tackling the
environmental crisis (CGG)…

(Examples of fiscal policies)

(Wk 3/Term 2)

A
  • Carbon taxes -> That make firms and households pay for carbon
    emissions -> This may disincentivise agents to produce CO2 emissions
  • Green subsidies -> Covers costs for production where there is renewable energy
  • Govt. investments e.g. R&D tech, low-carbon transportation, electricity transmission grids etc
43
Q

Economic strategies for tackling the environmental crisis (DGRG)…

(Examples of monetary policies)

(Wk 3/Term 2)

A
  • Decarbonised quantitative easing -> Central banks buying green bonds; use of climate criteria in identifying bond purchases
  • Green credit guidance -> min. amount of bank lending needs to be directed to environment-friendly sectors e.g. Reserve Bank of India
  • Restrict finance for high-carbon activities/companies -> financial regulation -> e.g. capital requirements
  • Green public banks -> Public entities that provide credit for financing of low-carbon projects
44
Q

Economic strategies for tackling the environmental crisis…

(Degrowth)

(Wk 3/Term 2)

A
  • Some economists argue reduction of environmental impact per GDP unit cannot ensure ecological sustainability.
  • They believe GDP reduction (degrowth) + changes in institutions’ and individual behaviour -> only way through which we can deal with environmental problems.
  • They argue that we need to reduce our consumption by dismantling culture of consumerism -> re-evaluate wellbeing and disconnect it from GDP + reduce working hrs to avoid a negative effect of a lower GDP on employment.

Lecture/seminar/reading content notes (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions