INTERMED MICRO CLASS NOTES AND STUDY GUIDE

study of economics is the

allocation of finite/scarce resources

opportunit cost

best alternative we forgo

marginalism

additional incremental costs or benefits of something

price of bond and interest rates

are negatively coordinated

What does the production frontier mean? 

The production frontier shows the maximum output combinations of two goods an economy can produce with its available resources and technology.

how does the PPF shift right

training, population, equipment

dont sleepwalk

through life

you only have one body and mind

so take good care of it

what did charlie munger say

the safest way to det what you want is to deserve it

which company downplayed the impact of tariffs

chipotle

star

mcdonalds

how is the demand curve sloped

down sloped

what is each point on the demand curve called

quantity demanded

what shifts the supply and demand curve

change in exogenous factors apart from the product

what causes movement along the curve

change in price therefore changing the quantity demanded as it depends on the value they see in a product relative to the price change.

Price of gasoline went up:

A. Demand of gas shifts to the right

B. Demand of gasoline shifts to the left

C. Quantity demanded of gasoline increases

D. Quantity demanded of gas decreases

D. because change in quantity demanded causes movement along the curve

Income and wealth goes up:

A. Demand of the gasoline shifts to the right

B. Demand of gas shifts left

C.Quantity demanded of has increases

D. Quantity demanded of gas decreases

A. because exogenous factors shift the curve

Price of gas went up:

A. Demand of trucks shifts to the right

B. Demand of trucks shifts to the left

C.Quantity demanded of trucks increases

D. Quantity demanded of trucks decreases

B. Gas is still the exogenous factor to trucks

Price of gas went up:

A. Demand of train tickets shifts to the right

B. Demand of train tickets shifts left

C. Quantity demanded of train tickets dereases

D. Quantity demanded of train tickets decreases

A. as people wont want to drive cars, gas is exogenous to trains

What is the slope of the supply curve

positive

why is the supply curve sloped the way it is

as prices go up, more producers can produce

profit=

revenue-costs

revenue is

what we collect

price of beef went up:

A. Supply of chickens shifts right

B. Supply of chickens shifts left

C. Quantity supplied of chicken increases

D. Quantity supplied of chicken decreases

E. None of the above

C. substitute goods

How do you calculate consumer surplus? 

The difference between the maximum amount a person is willing to pay for a good and its current market price.

How do you calculate producer surplus? 

The difference between the current market price and the cost of production for the firm=profit per unit

CEO of JP morgan?

Jamie Dimon

Money’s three properties

unit of account, store of value, means of exchange

commodity money example

gold

fiat or token money

paper money

M1

money currently held outside banks + demand deposits+traveler’s checks+other checkable deposits (cash)

assets

liabilities + net worth

liabilities

what you owe

net worth

what you own

net worth =_

assets-liabilities

loans are what to a bank

assets as they can make money off of it

deposits are what to a bank

liability because its our money that the bank owes us

reserves exist in what form

cash

what bank was used in class for how banks make money

wells fargo

profit=

loan x interest-deposit x interest

dual mandate of the Fed reserve

manimum employment and price stability

when does the fed sell securities

to tighten monetary policy

when does the fed buy securities

to loosen monetary policy

Macroeconomy framework

measuring output, measuring inflation, measuring labor market activity

GNP depens on

nationality

is stock counted in GDP

no

where do canadian voycitts affect U.S negatively?

michigan

company conference on investment report research is

barclays

what elections

german

U.s GDP in 2024 and what happened

2.5% in 2024 and slowed slightly in final quarter

elon musk and lex friedman

advie to young people

why some countries are rich/poor?

the reason is GDP per capita

which column is a measure of poor/rich countires?

per capita income

what is common correlated to wealth

total factor productivity

what does total factor productivity explain

differences in wealth

two properties of cobb douglas function

constant returns to scale, diminishing marginal product

difference between inflation and price

inflation is the overall increase in price level

real interest rate

difference between the interest rate on a loan and the inflation rate

debtor is the

borrow

creditor is the

lendor

if inflation rate is higher than anticipated whos better off debtor or creditor?

creditor

labor force participation rate =

labor force/adult population x 100

rate of unemployment=

Unemployed/labor force x 100

discouraged worker effect

those who want to work but have given up looking

Structural unemployment

caused by changes in the economy that create a mismatch between worker’s skills and available jobs

frictional unemployment

temporary unemployment due to people moving between jobs or entering the workforce

cyclical unemployment

caused by economic downturns or recessions, when demand for goods and services decreases leading to job losses

nominal inflation rate in a problem vs inflation rate

will be the one stated on the loan while inflation is the regular one

real interest rate=

nominal interest rate-inflation rate

required reserve ratio=

reserve/deposit

money multiplier=

1/required reserve ratio

fractional reserve system

allows banks to keep only a fraction of their deposits as reserves while lending out the rest

max money a bank can lend out=

max loan=total reserves-(deposits x required reserve ratio)

future value formula

FV=PV(1+i)^n where i is 1.1%

Y=

F(K,L)

F(K,L)=

AK^0.3L^0.7

y is

output per labour

y=

Y/L

k is

capital per worker

k=

K/L

employment rate

employed/total population x 100

inflation is

an increase in the overall price level