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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
Note 
Flashcard (20)