Eco Topical 1

Limit pricing

Lowering price to stop new competitors from entering market

Predatory pricing

Lowering prices to drive current competition out

AR constant

TR constant increasing gradient

Characteristics monopolistic

Differentiated products; Significant number of sellers; Freedom of entry and exit

Reservation price

the maximum price a consumer is willing to pay for a product or service based on the total perceived consumer benefits

Which price discrimination is self discrimination based on quantity or product tiers?

2nd degree

Poverty trap

Working not worth it due to welfare and tax structure; also hard to escape

Transfer earnings

The minimum payment needed to keep a factor of production in its current occupation

When is it all economic rent?

Perfectly inelastic supply of labour

Assumptions of MRPL theory

Price takers; homogenous workers; perfect labour mobility

MRP drawback

Cannot determine tertiary sector MRP

SOWIL

SE will increase work; IE will increase leisure

3 motives for liquidity preference

transactional; precautionary; speculative

Total currency flow

HDI determinants

Life expectancy at birth; Mean years of schooling for adults and expected years of schooling for children; GNI PPP adjusted

Functions of money

Medium of exchange; Unit of account; Standard of deferred payment; store of value

Characteristics of money

durability, portability, divisibility, uniformity, limited supply, acceptability

Narrow money

the most liquid part of a country's money supply, made up of physical currency and checking account deposits that people use for immediate daily spending

Broad money

comprehensive measure of the total money supply in an economy, including physical currency, highly liquid checkable deposits, and less liquid assets like savings accounts and time deposits

Active balance

Money held to pay for daily goods, services, and unexpected bills (T and P); interest inelastic

Idle balance

Money kept out of circulation and held as cash or liquid savings instead of risky assets (S); interest elastic

Defl gap on KK model

Vert distance

Defl gap on IGX STM model

Vert distance J vs W

Unemployment

People of working age who are willing and able to work at current wage but can't find a job

Labour force participation rate

the percentage of the working age population that is either working or actively looking for work

Sweden primary workers?

2%

MEW

Measurable economic welfare, includes unpaid work and removes regrettable that don't increase living standards

MPI

Health; education; living standards (cooking fuel, sanitation, drinking water, electricity, housing, basic assets)

Uganda

2018 under 14 40% of population

Where does profit, interest dividends go?

Current account

4 parts of financial account

FDI; portfolio investment; other investments; reserve assets

Capital flight

the rapid, large-scale outflow of money and financial assets from a country

Will fixed e/r work with or against pressures?

With

Mali primary workers?

80%

Income effect (Goods)

Price fall increases the consumer’s real purchasing power

Poverty Trap

Occurs when an increase in earned income leads to a minimal increase in net income due to high marginal tax rates and the withdrawal of means-tested benefits.

Bilateral Monopoly

Monopoly and monopsony in the same market

Substitution effect (working)

When your wage increases, the cost of taking time off goes up

Income effect (Working)

When your wage increases, your total purchasing power goes up, making you feel wealthier overall

Inflation transmission

High interest rates may cause COST PUSH inflation by increasing cost of debt servicing and borrowing to firms

Reservation wage

the lowest wage rate at which a worker is willing to accept a particular job or enter the labor market

Increase NRU

Increase unemployment benefits (increasing reservation wage)

Decrease NRU

Increase labour mobility (Reduces frictional and structural mismatch)

Narrow money

Notes/coins in circulation and commercial bank liquid assets at the central bank

Broad money

Includes narrow money plus "near-money" like Treasury bills and less liquid deposits

Labour force

Defined as the sum of the employed and the active unemployed

The labour math paradox

The employment and unemployment rates do not sum to 100% because they use different denominators (e.g., the working-age population vs. the active labor force)

Beveridge curve

Inverse relationship between job vacancies and unemployment

Devaluation tradeoff

Improves NX but worsens TOT

Currency pressures in fixed system

Currency pressures in fixed e/r system; initially try to counter; then go with it (unable to afford further counter)

Relationship between bond prices and interest rates

Inversely proportional