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Economics 1

The document discusses key economic concepts including: - Opportunity costs refer to forgone alternatives when making a choice. - A production possibilities frontier shows combinations of goods an economy can produce given resources. - Exports are goods/services sold abroad while imports are bought from other countries. - GDP measures the value of finished goods/services produced domestically in a period. - Monetary policy refers to central bank actions while fiscal policy involves government revenue/spending. - Inflation is rising prices over time while hyperinflation sees over 50% monthly growth. - Exchange rates determine currency values in international trade.

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vadim.shalagin
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19 views

Economics 1

The document discusses key economic concepts including: - Opportunity costs refer to forgone alternatives when making a choice. - A production possibilities frontier shows combinations of goods an economy can produce given resources. - Exports are goods/services sold abroad while imports are bought from other countries. - GDP measures the value of finished goods/services produced domestically in a period. - Monetary policy refers to central bank actions while fiscal policy involves government revenue/spending. - Inflation is rising prices over time while hyperinflation sees over 50% monthly growth. - Exchange rates determine currency values in international trade.

Uploaded by

vadim.shalagin
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Introduction

- What are opportunity costs?

- Production possibility frontier


The Production Possibilities Frontier (PPF) is a graph that shows all the different combinations of output of two goods
that can be produced using available resources and technology.

- What are imports and exports


Exports are goods and services sold to one country from another.
Imports are good or services bought by one country from another country.

- GDP
The monetary value of all the finished goods and services produced within a country's borders in a
specific time period.

- Formula
We are using: The formula for GDP is: GDP = C + I + G + (X-M). C is consumer spending, I is business
investment, G is government spending, and (X-M) is net exports. X = exports; M = imports

- ECB
- Ecofin
"Ecofin Council" is a meeting in the composition of the ministers of economics and finance.
- functions of the ECB
the definition and implementation of monetary policy for the euro area;
the conduct of foreign exchange operations;
the holding and management of the official foreign reserves of the euro
area countries
- monetary vs. fiscal policy
Monetary policy refers to actions central banks take to pursue objectives such as price stability and
maximum employment.
Fiscal policy refers to the government’s revenue collection and spending decisions
- Inflation and hyperinflation
Inflation is the rate of increase in prices over a given period of time.
Hyperinflation is extremely rapid inflation. Generally, growth is more than 50% a month.
- Variable and fixed interest rate
Fixed rate: the interest you're charged stays the same for a number of years, typically between two to five
years.
Variable rate: the interest rate you pay can change.

- why did Venezuela get into so much trouble?


When oil prices fell globally, Venezuela, as an oil-dependent nation, suffered greatly.
Corruption
Economic policies including price controls and nationalizations, led to distortions in the economy
Hyperinflation
Political instability
International Sanctions: The Venezuelan government's actions, including human rights abuses and anti-
democratic measures, led to international sanctions.

Supply and demand:


- Draw a demand schedule (numbers given) as points on a graph
- Law of demand and changes in demand
At a higher price consumers will demand lower quantity of a good.
Changes in demand: BITER - Buyers(n of); Income; Tastes; Expectations; Related goods
- law of supply, draw supply schedule
- equilibrium

Markets:
What are markets?
Markets are places in which things are bought and sold. In the Economics and Business, however, the
market is not a place; it has expanded to include the whole geographical area in which sellers compete
with each other for customers.
- monopoly and oligopoly
- What is monopolistic competition?

- Exchange rate:
- what is an exchange rate?
Exchange rate is a rate at which one currency will be exchanged for another.
- fixed. vs. floating exchange rate
A floating exchange rate refers to a currency where the price is determined by supply and demand factors
relative to other currencies. A floating exchange rate is different to a fixed – or pegged – exchange rate,
which is entirely determined by the government of the currency in question.
- relation between exchange rate and import / export
When the exchange rate is high it is easier to buy goods or services from abroad.
When the exchange rate is high it is harder to sell products or services abroad.
- Depreciation and devaluation
Devaluation is an official reduction/fall in the value of the currency planned by the government.
Depreciation is a fall in the value of a currency based on the market forces of demand and supply in the
foreign exchange market.

- Taxation
A tax is a financial charge or other levy imposed upon an individual by the government.
- Types of taxes
direct tax vs. indirect tax
Direct tax is the tax that a person or company pays directly. For example, income tax is taken out from
one’s salary. Indirect tax is payed by a third party. For example when buying something from the shop you
dont have to pay any tax but the seller is responsible for it.

progressive tax vs. flat tax


Progressive tax rate is the tax rate that increases or decreases as taxable income increases or decreases.
It creates lower tax rate for people with lower incomes and higher tax rates for those who have higher
incomes.
A flat tax rate refers to a tax system where a single tax rate is applied to all levels of income.

What do countries do with the taxes?


They use them to fund a variety of goods, programs, and services

Budgets
A governmental budget is an annual statement of the estimated receipts and estimated expenditures of
the government during a fiscal year.

deficit vs. surplus


A surplus occurs when a government taxes more than it spends.
A deficit occurs when the government spends more than it taxes and receives.

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