ECON SPACED REPETITION

determinants of demand

PINFT:

• Price of related goods (in the cases of substitutes and

complements)

• Income

• Number of consumers

• Future price expectations

• Tastes and preferences

determinants of supply

• Changes in costs of factors of production (FOPs)

• Prices of related goods (in the cases of joint and

competitive supply)

• Indirect taxes and subsidies

• Future price expectations

• Changes in technology

• Number of firms

determinants of PED

• number and closeness of substitutes

• degree of necessity

• proportion of income spent on the good

• time

determinants of PES

• time

• mobility of factors of production

• unused capacity

• ability to store

• rate at which costs increase

causes of inequality / poverty

• 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

The impact of income and wealth inequality

• Economic growth: 

  • Inequality could incentivize hard work and good education, which increases Aggregate Supply.

    • more government money spent on transfer payments to the poor.

• Standards of living:

  • will improve more for rich people and less for the poor.

• Social stability:

  • • Less equality generally leads to more unrest and violence.

monetary policy pros

• flexible

• easily reversible

• short time lags

monetary policy cons

• limited scope of reducing interest rates when close to 0

• low consumer and business confidence

fiscal policy pros

• targeting of specific economic sectors

• government spending effective in deep recession

fiscal policy cons

• political pressure

• time lags

• sustainable debt

• crowding out

ways to fix inequality / poverty

• taxes

• investment in human capital

• transfer payments

• minimum wages

MARKET BASED supply side policies

• deregulation

• privatization

• trade liberalization

• anti-monopoly regulation

• tax cuts for personal income and for businesses

INTERVENTIONIST supply side policies

• education, training

• improving quality, quantity, and access to healthcare

• R&D

• infrastructure

supply side policies cons

market based:

• equity issues

• environmental impact

interventionist:

• costly

• time lags

supply side policies pros

market based:

• resource allocation

• no burden on gov budget

interventionist:

• direct support of sectors important for growth

benefits of international trade

-increased competition

• lower prices

• greater choice

• acquisition of resources

• access to larger markets

• economies of scale

• more efficient resource allocation

• more efficient production

reasons against international trade

-protection of infant (sunrise) industries

• anti-dumping/unfair competition

• balance of payments correction

• government revenue

• protection of jobs

advantages of trading blocs

trade creation (HL only)

• greater access to markets offer potential for

economies of scale

• with freedom of labour, there are greater

employment opportunities

• membership in a trading bloc may allow for

stronger bargaining power in multilateral

negotiations

• greater political stability and cooperation

disadvantages of trading blocs

trade diversion (HL only) (trade shifts to member countries)

• loss of sovereignty

• challenge to multilateral trading negotiations

advantages of a monetary union

• certainty in the exchange rate, increasing stability and confidence in trading.

• transaction costs are lowered.

• This convenience also incentivizes more investment and more trade.

disadvantages of a monetary union

• lose sovereignty

• affect member states differently. 

• high costs for converting old currencies into the new common one

fdi

international firms investing abroad, usually into factories to decrease costs of production.