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from school exam notion page, update after more revision
price floor
Pennsylvania → price floor for milk → illegal for milk to be sold for less than $4.76 (USD) per gallon.
Northern Territory, Australia → a price floor on alcohol of $1.30 per standard drink to discourage alcohol consumption.
price ceiling
Australia, 2022 → a price ceiling for gas limiting it to $12/GJ, this was because gas is a necessity so significantly contributes to the cost of living.
indirect tax
In NZ a regional fuel tax (per unit indirect tax) is in place in Auckland which means there is an extra tax of 10 cents per litre to discourage the use of private petrol vehicles instead of electric or public transport.
subsidy (micro)
Singapore subsidies all government recommended vaccinations for all eligible citizens and permanent residents of Singapore. These subsidies cover up to 75% of the cost for the general adult population, for children vaccines are 100% subsidised. It would cost the typical adult Singaporean citizen $35 to $63 per dose, in Singaporean dollars.
direct provision
Auckland Council is the parent organisation of Auckland Transport which provides public transport by way of trains, buses and ferries, to those in Auckland at a cost. In this situation the local government is supplying transport rather than the private sector. This is because the government recognises that transport is a merit good and should not be supplied in a profit maximising manner.
legislation and regulation
- alcohol cannot be sold to anyone under 18 in NZ - alcohol must be sold in a liquor store or a distinct section of the supermarket not in the main aisles in NZ
consumer nudging
Logo colours — yellow = happiness and red = excitement so McDonald’s uses both, green = natural so consumers will believe goods are more environmentally friendly eg. bp, Wholefoods
government response to externalities
Emissions trading scheme — minimum price and trigger price after negative externalities of production Auckland Regional Fuel Tax → in response to negative externalities of consumption
Singapore vaccine subsidies, Auckland public transport → in response to positive externalities of consumption
government response to common pool resources
Great barrier reef → sustainability threatened → education and regulations
government response to monopoly power
Ticket master and live nation merger → high consumer prices, lack of choice → government attempts to undo the merger in the US
government response to asymmetric information
Provision of information — all foods sold must have nutritional information panels so consumers understand the impacts of the food on their health.
Key global commodities experiencing rising prices due to increased demand and/or decreased supply
2021 → higher demand for electric vehicle batteries → price of lithium increased
Key global commodities experiencing falling prices due to increased supply and/or decreased demand
2020 → covid → less transport → oil prices fell → surplus oil, historically low prices
The impact of a price war or of price fixing on stakeholders of a selected industry
2020 → oil price war between Russia and Saudi Arabia → plummeting prices → negatively impacted oil export countries
The risks of increasing monopoly power and abuse in a selected industry
Google 90% market share → less competition, innovation, consumer choice, privacy concerns
Government intervention in response to abuse of market power
Investigation into NZ supermarkets, legislation against geographical monopolies
Perfectly competitive markets
Local agricultural markets
Monopolistically competitive markets
Fast food chains, such as McDonald's and Burger King, offering similar yet differentiated products.
Collusive oligopolies
2019 → truck manufacturer cartel (daimler, volvo, man) → price fixing, unsustainable → higher prices and less competition → fined by the EU
Non-collusive oligopolies
Supermarkets in NZ
Technology → apple, samsung, huawei
Monopolistic markets
Microsoft has a market share of over 70%
Google accounts for over 90% of searches
Natural monopolies
Auckland transport
Government response to public goods
Direct provision of public transport in Auckland.
inflationary gaps
Hyper-inflation in Argentina due to money creation and overspending by the government.
deflationary gaps
deflation in Japan due to aging population, strict immigration laws → negative interest rates and news visas for workers to immigrate
consequences of economic growth
High economic growth in India allowing it to participate in G20 and growing its technology industry thus employment opportunities.
High economic growth in China is causing income inequality, environmental degradation and resource depletion.
government responses to high inflation/use and impact of contractionary fiscal policy/use and impact of contractionary monetary policy
NZ OCR from 2% in May 2022 steadily up to 5.5% in May 2023, 2022 inflation was 7% while 2023 is 6% → contractionary monetary
UK has frozen income tax brackets for 4 years instead of continuing to increase them with inflation → tax brackets in real terms will be lower putting more people in higher brackets so more real tax revenue will be collected as inflation occurs and brackets are fixed, inflation was 6.7% in August 2023 → contractionary fiscal
government responses to high unemployment
France had an unemployment rate of 9.9% in July 2016. Government implemented a subsidy for labour, reduced welfare payments and tax rates.
cost-push inflation
In 1973 OPEC (organisation of petroleum exporting countries) restricted its production so the price of petrol increased by 400%, since it is a common factor of production the cost of production for multiple industries decreasing SRAS causing the APL to rise, stagflation
demand-pull inflation
The Great Recession in the US from 2007-2009 was caused partly by the collapse of the real state bubble, consumption increased as more people were able to get mortgage backed securities which increased the price of housing thus the APL
automatic stabilisers
In 2008 US spent $220 billion in unemployment benefits in order to stabilize the economy during recession
use and impact of expansionary fiscal policy
Qatar — 0.1% unemployment in 2020 due to large amounts of public sector jobs, oil and gas resources, multinational firms working in Qatar due to its low tax rates — income and corporate are 10%
use and impact of contractionary monetary policy
US, 2018 → interest rates up to stabilise prices → slower growth, higher unemployment
use and impact of expansionary monetary policy
US, 2020 → interest rates down to near 0, quantitative easing used → lower unemployment, higher growth, potential for inflation
policies to reduce poverty and income/wealth inequality
UK, 2020 → Universal Credit system (benefits for low income households) → critics highlighted issues with delays and adequacy of payments, affecting vulnerable populations
use and impact of interventionist supply side policies
Germany, 2019 → investment in renewable energy infrastructure → job creation, increased economic activity
use and impact of market oriented supply side policies
UK, 2012 → “Help to Buy” scheme to encourage home ownership → economic growth, market activity BUT higher prices exacerbated the issue
trade off between economic growth and sustainability
Deforestation of the Amazon in Brazil → higher GDP and job creation
economies experiencing trade disputes
Between the US and China since 2018 when the US imposed trade barriers on China. In October 2020 it was found that the trade war was not successful in increasing US production.
economies experiencing exchange rate changes
Japan, 2024 → low interest rates, lack of FDI → depreciation of the yen Kenya → depreciation → loans from the IMF → appreciation
trading bloc: free trade agreement
Between NZ and China in 2008. 98% of Tariffs on NZ exports to China lifted. Two way trade valued at 38 billion in 2023.
trading bloc: customs union
The European Union — goods move freely between member states, apply common external tariffs eg.
trading bloc: monetary union
the Euro Zone — started in 1999, used by 20 EU countries
economies experiencing current account problems
Current account deficit in Turkey as it is dependent on imports for energy. Current account surplus in Japan due to a currency depreciation.
economies experiencing poverty
South Sudan — 80% of people live in absolute poverty, 8.9 million people need humanitarian assistance, ranks 185 out of 189 countries on the HDI
economies dependent on a narrow range of commodities
2020: Libya relies on oil for more than 90% of its total exports. Over 1 million people live in extreme poverty.
tariffs
US, 2018 → aim to protect domestic industries, reduce the US’ trade deficit → tariffs on over $360 billion worth of Chinese imports during the U.S.-China trade war → higher government revenue BUT higher prices, retaliatory tariffs
quotas
EU, 2018 → quota on US steel to protect EU industry → higher cost of production for EU producers
subsidies (global)
Common Agricultural Policy (CAP) in the European Union — subsidies to European farmers to support agricultural production and stabilise rural economies → distorts global markets, disadvantages LDCs
administrative barriers
India → Bureau of Indian Standards (BIS) certifications as an administrative barrier → supporting the Indian government's "Make in India" initiative, which aims to promote domestic manufacturing.
dumping practices and anti-dumping measures
US, 2012 → anti-dumping on Chinese solar panels → tariffs of up to 250% → higher prices, international tensions
infant industries
Ethiopia → textile and garment industry → offered tax holidays, subsidised land, infrastructure development to attract (foreign) investment → job creation, industry growth
floating exchange rate + policy + cause
UK, 2016 → volatile due to Brexit → reserve bank lowered interest rates, used quantitative easing → appreciation by 2022 due to rising inflation
fixed exchange rate + policy + cause
Argentina pegged its peso to the U.S. dollar at a 1:1 rate to control hyperinflation and stabilize the economy during the 1990s → less export competitiveness → trade deficit → reserves insufficient, abandoned the fix rate → sharp devaluation
managed exchange rate + policy + cause
China, 2015 → yuan is managed → stock market crash → downward pressure → foreign reserves sold, largely USD → rate stabilised
impact of an appreciation
Switzerland, 2020 → appreciation against the euro → lower inflation due to cheaper imports → lower cost of living BUT higher unemployment in manufacturing (export industry)
impact of a depreciation
Turkey, 2021 → lira depreciated, lost 20% against the USD → high inflation, rising unemployment in import reliant industries → government raised interest rates → public opposition
high income inequality
South Africa, 2021 → high gini coefficient due to socioeconomic divides from apartheid → high unemployment, concentrated wealth
low income inequality
Norway → low gini coefficient due to welfare, high taxes, healthcare, education, progressive taxes and strong unions
policies achieving SDGs
Sweden, since 1991 → carbon taxes → decoupled economic growth from carbon emissions
policies not achieving SDGs
Deregulation in Brazil → deforestation of the Amazon
poverty reduction policies
Brazil → Bosla Familia programme for low income families → payments when children get vaccinated, attend school → extreme poverty decreased
success of FDI
Vietnam, since the 90s → consistent economic growth, strong manufacturing and technology sectors → workers upskilled by samsung etc, diversification away from agriculture
failure of FDI
Zambia, mining sector → environmental degradation, unfair labour practices → minimal development in infrastructure and poverty reduction
microfinance
Bangladesh → microfinance by Grameen Bank, social incentives to repay → reduced poverty by promoting entrepreneurship and improving livelihoods
debt relief
Uganda, 1998 → HIPC initiative → debt relief from the IMF and World Bank → external debt reduced by over $650 million → funds for education, health, infrastructure → less poverty, more development
health programme for development
Ghana, 2003 → national health services → universal healthcare → better maternal health, reduced infant mortality
education programme for development
Kenya, 2003 → free primary education → long term development
