econ real world examples

Supply shift right

India subsidizing gas Supply of air travel increasing in the UK as more airline companies are joining

Supply shift left

Sugary drinks - UK sugar tax shifts supply curve to the left

Supply shock

Suez canal blockage in 2021

Excess demand (shortage)

Iraq invasion 2003, oil prices rose $20 to $35 a barrel in 2004, the war disrupted extraction of crude oil, reducing world supply

Excess supply

Retailers often overproduce clothing styles. When seasons change, they face excess inventory

High PED (elastic) goods

Luxury items - Gucci clothing

Low PED (inelastic) goods (2 examples)

Cigarettes have a PED between -0.4 in USA + price of Daraprim (cancer drug) was increased by more than 50 times but demand barely changed, because it was a necessity

Negative YED (inferior goods)

Second-hand clothing, house-brand goods, margarine, cheap goods

Low positive YED (income inelastic) (normal good)

Most foods consumed at home have a low YED - about 0.2

High positive YED (income elastic) (luxury good)

Premium cars, boats, jewelry

YED and sectors

China’s growth period from the 2000s to 2020s saw shifting sectors from primary to manufacturing to service as the economy developed and incomes rose

High PES (elastic)

Taxi services, pens, smartphones

Low PES (inelastic)

Nuclear reactors, fresh produce, gold, housing

Indirect tax

British VAT tax= 20% on all goods and services

Subsidy

US agricultural subsidies, $20 billion per year. Ensures steady domestic food supply, provides economic stability to farmers, increases international competitiveness. China subsidising solar panel production, increased production by 25%

Price ceiling

San francisco rent controls on apartments, results in a capped price

Price floor

For decades, the EU maintained a price floor for sugar beet by guaranteeing a price well above the world market price, often resulting in surpluses. Minimum wage in UK is 8 pounds an hour

Legislation for merit goods

Vaccinations in Australia - making it mandatory for children to get vaccine to enroll in school - done through legislation

Direct provision of merit goods

New Zealand national immunisation schedule, free vaccines offered to reduce diseases and illness

Subsidized provision of merit goods

SG - Low-income Families are eligible to sign their children up for the Financial Assistance Scheme (FAS). Under the FAS, students get to enjoy subsidised school fees and transportation fees, and free textbooks.

Negative externalities of consumption

cigarettes Malaysia - Nov 2015, 40% excise duty placed on cigarettes. Legislation Jan 2019, smoking banned in all eateries

Sugar tax

2017 - about 20p per litre on sugary drinks in the UK, it has worked as many companies have changed their recipes to reduce sugar content in their drinks

Positive externalities of production

Production of hybrid car technology by Toyota, as they are providing free access to their patents and providing parts to competitors, to increase the use of lower-emission technology

Negative externalities of production (2 examples)

DuPont released harmful chemicals up until 2013 into the Ohio river, known to cause cancer. Currently facing lawsuit from the state of Ohio.

manufacturing has led to air pollution being among the highest in China. In response China subsidized $9800 to buyers of electric and hydrogen vehicles to combat rising air pollution

Advertising to promote consumption of merit goods

5-a-day programme run in Germany in line with WHO statement to eat 400 grams of fruits and vegetables per day

Common Access Resources (2 examples)

Coral harvesting in the Great Barrier Reef, government quota set at 200 tonnes but it is not sustainable

Public goods

National defense, street lighting, roads, public parks, sewer systems, law enforcement

Legislation to combat negative externalities of consumption

Singapore air pollution laws, vehicles must meet strict emission standards to be able to be used

Carbon tax

In 2012, Japan implemented tax on all CO2 emissions from fossil fuels at a rate of 289 yen per tonne of CO2. All tax revenue used for reducing CO2 emissions, investing in clean tech

Cap and trade schemes

EU Emissions Trading System: carbon market launched in 2005 to reduce greenhouse gas emissions efficiently. it sets a cap on total emissions, which decreases annually. Companies receive or buy allowances, selling them if they have a surplus or buying more if needed.

Funding for clean technology

China has invested over 200 billion yuan (~US$28 billion) in NEV subsidies and tax breaks from 2009–2022 in the development of electronic vehicles

GDP vs GNP stats

Bangladesh GDP 2017

Total GDP/GNI vs GDP/GNI per capita

India GDP: 4.15 trillion, France GDP: 3.6 trillion
India GDP per capita: 2813, france GDP per capita 40000

High and low unemployment

Greece: 9% in March 2026, 21% youth unemployment (structural)
Singapore: 2% unemployment (retraining programs, skill development)

Frictional unemployment

Singapore has been restructuring the economy, shifting towards a digital economy aiming to incorporate technology to increase productivity. As the economy restructures, new jobs are created and some jobs are abolished, which results in frictional unemployment as people change jobs.

Structural unemployment

During Singapore’s economic restructuring, MOM said “jobs and skills mismatches will continue to be a challenge”.

SkillsFuture is a government program aimed at reskilling the workforce through training to gain skills that are in demand.

Seasonal unemployment

Liberia, agriculture employs 70% of the population. This would result in high seasonal unemployment, as most of the workforce is only required during peak periods, the harvesting and planting of crop support

Cyclical unemployment

2008 financial crisis sent many economies into recession, which increased cyclical unemployment. In the US, before the financial crisis in Dec 2007, unemployment was 5%. At the end of the financial crisis in 2009, unemployment was 9.5%.

High inflation

Argentina, 32.61% as of March 2026. high levels of gov spending very low interest rates, printing money

Target inflation

Singapore, US, China - 2%

Deflation

Japan has been experiencing periods of deflation since the late 1990s, due to the declining, aging population, strict immigration laws, and declining productivity growth.

High economic growth

India, referred to as the world's fastest growing major economy, around 7%. Growing population, privatisation of oil, coal and airline, tax reform, all helped increase growth.

Low economic growth (2 examples)

Eurozone growth is slowing. 1.9% growth in 2018, but only 0.2% growth from Q3 to Q4 of 2018. Reason

Equal distribution of income

Sweden Gini Coefficient: 0.23

Public education, including university, is free so everyone has an equal opportunity to earn a high income. Progressive taxes, long term unemployment benefits help redistribute income.

Unequal distribution of income

South Africa Gini Coefficient: 0.63

Over half of population in poverty

Income distribution is worsening, not enough new jobs are being created, and the jobs that are being created are high-skill jobs, not accessible to those in poverty.

Policies to Reduce Income Inequality

Conditional cash transfer programs: Brazil’s Bolsa Família program provides conditional cash transfers to poor households to encourage children to attend school and receive healthcare. Between 2001 and 2017, the proportion of the population living in poverty fell from 24.7% to 6.5%.

Progressive taxation

Sweden has a progressive income tax system that places a higher tax burden on those with higher incomes. In 2021, the top marginal income tax rate in Sweden was 57.2%. The policy has helped to reduce income inequality in the country, and Sweden consistently ranks as one of the most equal countries in the world.

Minimum wage laws

The United Kingdom has implemented minimum wage laws to ensure that workers are paid a fair wage. In 2021, the minimum wage in the UK was £8.91 per hour for workers aged 23 and over. The policy has helped to reduce income inequality in the country.

Education subsidies

Education is highly subsidized in Hong kong, where children can attend primary and secondary school for free

Universal basic income

Finland has implemented a universal basic income pilot program to test the idea of providing a basic income to all citizens, regardless of their income or employment status. The pilot program provided 560 euros per month to a group of randomly selected participants for two years. The results of the pilot were mixed.

Expansionary fiscal policy

Barack Obama’s economic stimulus package, ended the recession following the 2008 financial crisis. Cut taxes by $290 billion, spent $220 billion in unemployment benefits, allocated $275 billion to federal contracts to create jobs. Helped build consumer confidence after the recession and reduce unemployment

Contractionary fiscal policy

In the 90s, Bill Clinton raised income taxes from 28% to 36% for high income earners. Corporate tax also increased from 34% to 36% for corporations. Inflation fell from 6% to 3%. However, unemployment increased

Expansionary monetary policy

Japan is employing expansionary monetary policy with interest rates close to zero or sometimes negative, in order to stimulate economic growth.

Contractionary monetary policy

Argentina used 40% interest rates to try to control inflation and try to control a dive in the peso

Investment in human capital

Singapore, developing a strong public education system. SkillsFuture is a government program aimed at reskilling the workforce through training to gain skills that are in demand.

Investment in technology

Singapore committed to invest 1% of GDP into R&D, Fintech, AI, digital healthcare

Investment in infrastructure

Indonesia infrastructure investment 2017, plans for 550km of new bridges and major toll road projects like the Trans-Java Toll Road.

Deregulation

Singapore removed regulations on the electricity market, allowing private firms to sell electricity from Nov 2018, which increases competition. Previously, only government owned SP Group was able to sell electricity

Privatisation

India privatised the coal and oil industry, removing the monopoly power of the state and allowing private firms to join. This encourages domestic investment and FDI

FTA

USMCA - US Mexico and Canada Agreement, signed in Nov 2018, allows select products to be traded tariff-free between the three countries

$1.6 trillion in 2024 trade volume, supporting 56.2 million new jobs

Anti monopoly regulation

Singapore Grab and Uber. fined Grab and Uber $13 million for merging in SEA, as it reduced competition in the market. Grab was required to maintain the pricing algorithm it had pre-merger

Reducing unemployment benefits and minimum wage

US congress decided not to extend federal unemployment benefits at the end of 2013, which means unemployment benefits would end for 1.3 million people. This forced them to find a job, even if it was low paying.

Reducing labour union power

UK reducing trade union power, 2015, following a large number of strikes by London Underground and railways. Increased punishment for unlawful strikes

Income and business tax cuts

Tax Cuts and Jobs Act, implemented by Trump in Dec 2017. Reduced corporate tax from 35 to 21%, resulted in increased investment to expand productive capacity, and reduced income taxes

Automatic stabilizers

In 2008 US spent $220 billion in unemployment benefits in order to stabilize the economy during recession