Principles of economics 1 summary

Principles of economics 1 summary/samenvatting.Universiteit van Amsterdam2020 end-terms

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Principles of economics 1 summary by Mind Map: Principles of economics 1 summary

1. WEEK 1

1.1. H3 Equilibirium

1.1.1. SUPPLY AND DEMAND

1.1.1.1. HORIZONTAL, VERTICAL READING:

1.1.1.1.1. A SUPPLY CURVE

1.1.1.1.2. DEMAND CURVE

1.1.2. NOTICE THAT HOW TO UNDERSTAND HOW PEOPLE BEHAVE, YOU MUST LOOK AT THEIR OPPORTUNITY COST.

1.1.2.1. !!!

1.2. COWEN & TABARROK H1 H2:

1.2.1. 1 THE BIG IDEAS (10):

1.2.1.1. 1 INCENTIVES MATTER

1.2.1.1.1. SPEAKS FOR ITSELF

1.2.1.2. 2 GOOD INSTITIUATIONS ALLIGN SELF-INTEREST WITH SOCIAL INTEREST

1.2.1.3. 3 TRADE OFSS ARE EVERYWHERE

1.2.1.4. 4 THINKING ON THE MARIGIN (A LITTLE MORE, A LITTLE LESS)

1.2.1.5. 5 POWER OF THE TRADE

1.2.1.6. 6 IMPORTANCE OF WELATH AND ECONOMIC GROWTH

1.2.1.7. 7 INSITITUTIONS MATTER

1.2.1.8. 8 ECONOMOICS BOOMS AND BUSTS CANNOT BE AVOIDED, BUT MODERATED!

1.2.1.9. 9 PRICES RICES WHEN GOVERNMENTS PRINT TOO MUCH MONEY (INFLATION)

1.2.1.10. 10 CENTRAL BAKING IS A HARD JOB

1.2.1.11. ! ECONOMICS IS FUN! BIGGEST IDEA OF ALL

1.2.2. 2 TRADE

1.2.2.1. BENFITS OF TRADE:

1.2.2.1.1. 1 TRADE AND PREFERENCES

1.2.2.1.2. 2 SPECILIZATIONS, PRODUCTIVITY, AND THE DIVISION OF KNOWLEDGE

1.2.2.1.3. 3 COMPARATIVE ADVANTAGE (OPPORTUNITY COST)

1.2.2.2. TERMS

1.2.2.2.1. ABSOLUTE ADVANTAGE IS THE ABILITY TO PRODUCE THE SAME GOOD USING FEWER INPUTS THAN ANOTHER PRODUCER

1.2.2.2.2. PPF ( PRODUCTION POSSIBILITIES FRONTIER IS THE COMBINATIONS OF GOODS THAT A COUTNRY CAN PRODUCT GIVEN ITS PRODUCTIVITY

1.2.2.3. ADAM SMITH

1.2.2.3.1. TRADE AND GLOBALIZATION

2. WEEK 2

2.1. MONDAY PRE-RECORDED LECTURE

2.1.1. WHAT CAN COMPANIES DO

2.1.1.1. SOCIAL INFLUENCE

2.1.1.2. SHAPE GOOD HABITS

2.1.1.3. LEVERAGE THE DOMINO EFFECT

2.1.1.4. EMOTIONAL OR RATIONAL

2.1.1.5. EXPERIENCES OVER OWNERSHIP

2.1.2. UNFULFILLED DEMAND

2.1.3. HAYEK: PRICES / EQUILIBRIUMS ARE SIGNALS.

2.2. WILLEMIJN VAN DOLEN

2.2.1. MARKETING FUCKS OUR WELL-BEING

2.2.1.1. BECAUSE WE SEE: "MY WHITE HAS TO BE TEETHER, SKIN NEEDS TO BE MORE BETTER". ETC ETC.

2.2.2. SHOPPNING AND ADDS --> CRUSHES WELL BEING, AND HAPPINESS....

2.3. BOOK

2.3.1. INCREASING COST INDUSTRY

2.3.2. CONSTANT "

2.3.3. DECREASING

2.4. COWEN & TABARROK H3 H4:

2.4.1. h3

2.4.1.1. DEMAND AND SUPPLY CURVE

2.4.1.1.1. CONSUMER SURPLUS =

2.4.1.1.2. PRODUCER SURPLUS =

2.4.1.2. SHIFT IN DEMAND

2.4.1.2.1. "WHAT WILL PEOPLE pay MORE FOR THE SAME PRODUCT?"

2.4.1.2.2. INCOME

2.4.1.2.3. POPULATION

2.4.1.2.4. PRICE OF SUBSITUTES

2.4.1.2.5. PRICE OF COMPLEMETS

2.4.1.2.6. EXPECTATIONS

2.4.1.2.7. TASTES

2.4.1.3. SHIFT IN SUPPLY

2.4.1.3.1. TECHNOLOGICAL INNOVATIONS AND CAHNGES IN THE PRICE OF INPUTS

2.4.1.3.2. TAXES AND SUBSIDIES

2.4.1.3.3. EXPECTATIONS

2.4.1.3.4. ENTRY OR EXIT PRODUCERS

2.4.1.3.5. CHANGES IN OPPORTUNITY COSTS (!)

2.4.2. h4

2.4.2.1. TERMS:

2.4.2.1.1. SURPLUS = SITUATION IN WHICH TEH QUANTITYI SUPPLIED IS GREATER THAN THE QUANTITY DEMANDED

2.4.2.1.2. SHORTAGE = SITUATION IN WHIC THE QUANTATIY DEMANDED IS GREATER THAN TEH QUANTITY SUPPLIED

2.4.2.1.3. EQUILIBRIUM PRICE = QUANTITY DEMAND IS EQUAL TO THE QUANTITY SUPPLIE

2.4.2.1.4. RIGHT SIDE EQ PRICE = VALUE OF WASTED RESOURCES WITH NON SELLERS AND NON BUYERS LEFT SIDE OF EQ PRICE = UNSATIFIED WANTS WITH BUYERS AND SELLERS

2.4.2.2. VERNON SMITH

2.4.2.3. SHFITS IN DEMAND / SUPPLY CURVE =

2.4.2.3.1. DECREASE IN SUPPLY WILL RAISE THE MARKET PRICE AND REDUCE THE MARKET QUANTITY.

2.4.2.3.2. DECREASE IN DEMAND WILL RAISE THE MARKET QUANTITY AND REDUCE THE MARKET PRICE

3. WEEK 3

3.1. INVISBLE HAND =

3.1.1. by ADAM SMITH

3.1.1.1. JUST LEAVE THE ECONOMY AND THEIR CUSTOMERS. THE INVISABLE HAND WILL HAVE THE CUSTOMERS GO TO THE CHEAPER OPTIONS AND SO PRICE EQ AND NEW OFFERS ARE BEING CREATED.

3.1.1.1.1. NO HELP OF FISCAL POLICY

3.2. monday lecture!=

3.2.1. PROFIT= TOTAL REVENUE - TOTAL COST

3.2.1.1. P * Q - FC - VC

3.2.1.1.1. (TR/Q)-(TC/Q)*Q

3.2.2. FIRM SHOULD KEEP PRODUCING IF MR > MC

3.2.3. LAST UNIT PRODUCED MR = MC

3.2.4. MR = TR/Q

3.2.5. MC TC/Q

3.2.6. ELASTICITY = DEMAND AND SUPPLY CURVE "RATE"

3.2.7. FIRMS WILL ENTER WHEN P > AC

3.2.8. FIRM WILL EXIT WHEN P < AC

3.2.9. NO INCENTIVE FOR FIRMS P = AC

3.3. KEY SPEAKER: ALEXANDER

3.3.1. ALL THESE ^^(GRAPHS)^^ ARE MOSTLY ON THE BACKGROUND IN FIRMS.

3.3.2. FIRMS

3.3.2.1. GROUP

3.3.2.2. LEADERSHIP

3.3.2.3. LAW

3.3.2.4. LIMITED LIABILITY COMPANY FIRST IN NL

3.3.2.4.1. VOC

3.3.2.5. TECHNOLOGY - MACHINES

3.3.2.5.1. IMPORTANCE OF WORKING TOGETHER WITH THEM, AS YOU MUST!

3.3.2.6. DATA SCIENCE

3.3.2.7. BUSINESS ETHICS - PRINCIPLES

3.3.2.8. WHAT ARE THE CHALLENGES

3.3.2.8.1. STATISTICS, MATHEMATICS.

3.3.2.8.2. MARKETING & SALES

3.3.2.8.3. FINANCE AND ACCOUNTING

3.3.2.8.4. PRODUCTION AND INVENTORY

3.3.2.8.5. HUMAN RESOURCE MANAGEMENT

3.3.2.8.6. STRATEGY AND PLANNING

3.3.2.9. ZOOMING IN;

3.3.2.9.1. ENTREPRENEUR

3.3.2.10. ZOOM OUT;

3.3.2.10.1. THE CORPORATE SECTOR

3.3.3. WHAT IS A FIRM?

3.3.3.1. MANY DIFFERENT THINGS TO MANY DIFFERENT PEOPLE

3.3.3.2. MANY DIFFERENT SOURCES OF INSPIRATION TO MANY DIFFERENT SCHOLARS

3.3.3.3. THE SOLE PROPERTY OF ITS OWNERS ( THE SHAREHOLDERS )

3.3.3.4. THE COLLABORATIVE PROPERTY OF ITS STAKEHOLDERS (MANAGERS, PEOPLE, STAKEHOLDERS, SHAREHOLDERS)

3.4. friday lecture=

3.4.1. Ricardian rents:

3.4.1.1. it's what the owners makes on what his input factor does.

3.4.1.1.1. example of land and water. Wheat grows best near the river, but if the demand rises for wheat farmers will go also there but further away from the river. The costs of going further away (pumping water) will results in the price going up. (OR OIL WELLS)

3.4.2. damaged goods (low end prnters, high end printers)

3.4.3. PRICE DISCRIMINATION

3.4.3.1. is good for society

3.4.3.1.1. monopoly is other side.

3.4.4. Online shopping -->

3.4.4.1. "hey its you again"

3.4.4.1.1. Prices based on you without ads

3.5. COWEN & TABARROK H11 H14:

3.5.1. h11

3.5.1.1. TERMS

3.5.1.1.1. 1

3.5.1.1.2. 2

3.5.1.2. firms

3.5.1.2.1. PROFIT INCREASES (FROM 0) WHEN P = MC

3.5.1.2.2. P < AC

3.5.1.2.3. P > AC

3.5.1.2.4. ENTER

3.5.1.2.5. EXIT

3.5.1.2.6. SHUTDOWN

3.5.1.2.7. ZERO PROFITS = FIRMS COVERING ALL THE COSTS

3.5.1.3. INUDSTRIE

3.5.1.3.1. INCREASING COST INDUSTRY

3.5.1.3.2. CONSTANT COST INDUSTRY

3.5.1.3.3. DECREASING COST INDUSTRY

3.5.1.3.4. .

3.5.2. h 14

3.5.2.1. terms

3.5.2.1.1. price discrimination

3.5.2.1.2. arbitrage

3.5.2.1.3. perfect price discrimination

3.5.2.1.4. tying

3.5.2.1.5. bundling

3.5.2.1.6. preventing arbitrage

3.5.2.1.7. PRICE DISCRIMINATION (AIRLINES)

4. WEEK 4

4.1. monday lecture

4.1.1. BUNDLING AND TYING IS NOT ALWAYS GOOD

4.1.1.1. MICROSOFT 2000

4.1.2. HIGH PRICES ARE LIKE A FLAIR

4.1.2.1. "HEY LOOK, THERE'S A HIGH DEMAND'

4.2. KEYSPEAKERLECTURE JAN

4.2.1. PARETO IMPROVEMENTS =

4.2.1.1. .

4.2.2. PARETO=

4.2.2.1. TO MAKE SOMEONE BETTER AND NO ONE IS BAD OFF (WIN-WIN)

4.2.3. STOCKS

4.2.3.1. .

4.2.3.1.1. ??

4.3. friday lecture

4.3.1. HARBERGER WELFARE=

4.3.1.1. "WELFARE LOSS" the triangle that comes from price quantity isurplus.

4.3.1.1.1. IS RELATIVE CHANGE q IN RELATIVE CHANGE IN p (%)

4.3.1.2. IN WELFARE TRIANGLE YOU ALSO DO X 0,5

4.3.1.3. KEY FOR WRITING ASSIGNMENT =

4.3.1.3.1. start already!

4.3.2. SCHUMPETER=

4.3.2.1. ENTREPRENEURS ROLES IN PRICE MECHANISM

4.3.2.2. COMPETITION IS ENTREPRENEURI WHO CREATES DESCTRUCTION IN HIS OWN PRICES.

4.3.2.3. APPLE CEO IS SHCUMPETTER ;)

4.3.3. PORTER

4.3.3.1. 1 SUPPLIER POWER

4.3.3.2. 2 BUYER POWER

4.3.3.3. 3 SUBSTITUTES

4.3.3.4. 4 JOCKEYING competitors

4.3.3.5. 5 NEW ENTRANTS

4.3.4. EDGEWORTH BOX

4.4. COWEN & TABARROK H7 H12:

4.4.1. h7

4.4.1.1. the great economic problem

4.4.1.1.1. IS TO ARRANGE OUR LIMITED RESOURCES TO SATISFY AS MANY OF OUR WANTS AS POSSIBLE

4.4.1.2. speculation

4.4.1.2.1. THE ATTEMPT TO PROFIT FROM FUTURE CHANGES

4.4.1.3. futures

4.4.1.3.1. STANDARDIZED CONTRACTS TO BUY OR SELL SPECIFIED QUANTITIES OF A COMMODITIY AT A SPECIFICK PRICE TO LATER SELL ON A SPECIFICK TIME

4.4.1.4. predication market

4.4.1.4.1. SPECULATIVE MARKET TO DESIGN SO THAT PRICE CAN BE INTERPRETTED AS POSIBILTIES AND USED TO MAKE PREDICTIONS

4.4.1.5. .

4.4.2. h12

4.4.2.1. INVISIBLE HAND PROPERTY 1

4.4.2.1.1. WHERE P = M PRODUCED THE SELF-INETERESTED, PROFIT-SEEKING BEHAVIOR OF ENTREPENEURS RESULTS IN THE MINIZATION OF TEH TOTAL INDUSTRY COSTS OF PRODUCTION EVEN THOUGH NO ENTREPRENEUR INTENTS THIS RESULT

4.4.2.2. INVISIBLE HAND PROPERTY 2

4.4.2.2.1. EXIT AND ENTRY DECISIONS NOT ONLY WORK TO ELIMANTE PROFIT, THEY WORK TO ENSURE THAT LABOR AND CAPITAL MOVE ACROSS INDSTRUIES TO OPTIMALLY BALANCE PRODUCTION SO THAT THE GREATEST USE IS MADE OF OUR LIMITED RESOURCES

4.4.2.3. elimination principle

4.4.2.3.1. TELLS US THAT ABOVE-NORMAL PROFITS ARE ELIMINATED BY ENTRY AND BELOW-NORMAL PROFITS ARE ELIMINATED BY EXIT.

4.4.2.3.2. PERHAPS EVEN MORE IMPORTANT, THE ELIMINATIONS PRINCIPLE TELLS US THAT TO EARN ABOVE-NORMAL PROFITS, A FIRM MUST INNOVATE

4.4.2.4. J SCHUMPETER!

5. WEEK 5

5.1. monday lecture =

5.1.1. GDP: things people like, but also has it's downsides like pollution

5.1.1.1. Key facts about GDP: - GPD per capita varies among nations - everyone used to be poor (>1970;s) - there are growth miracles and growth disasters

5.1.1.2. GDP doesn't meaasure - illegal undeground market trans - non priced production (wahtsapp) - leIsUre, hobbies, sports, - economics bads - regions

5.1.2. INSTITIUTIONS ="RULES OF THE GAME" THAT PROMOTE ECONOMIC GROWTH

5.1.2.1. GOOD INSITITUTIONS ENCOURAGE INVEMENTS

5.1.2.2. respected property right

5.1.2.3. honest government

5.1.2.4. a depenbable legal system

5.1.2.5. competetive and open markets

5.1.3. SUPPLY OF SAVING. SAVING = INCOME THAT IS NOT SPEND ON CONSUMPTION GOODS

5.1.3.1. SMOOTHING CONSUMPTION

5.1.3.1.1. SPEND NOW, TO BE BETTER LATER. (fbm good investment E.G.)

5.1.3.2. IMPATIENCE - TIME PREFERENCE, POSITIVE INTEREST RATES

5.1.3.2.1. NOW RATHER THAN TOMORROW

5.1.3.2.2. THERE'S WHY THERE'S INTEREST, IT TAKES SOME DISCIPLINE TO PUT MONEY ASIDE TO SAVE

5.1.3.3. PSYCHOLOGICAL FACTORS, UPBRINGIN, NUDGING - CUSHION

5.1.4. DEMAND OF BORROW. INVESTMENT= THAT IS THE PURCHASE OF NEW CAPITAL GOODS

5.1.4.1. INDIVIDUALS BORROW TO SMOOTH CONSUMMPTION AND INVEST IN HUMAN CAPITAL

5.1.4.2. BUSINESS BORROW TO FINANCE LARGE PROECTS

5.1.4.3. THE AGILITY TO BORROW GREATLY INCREASES THE BAILITY OT INVEST

5.1.4.4. HIGHER INVESTMENT INCREASES THE SANDARD OF IVING AND THE RATE OF ECNOMMICS GROWTH

5.1.5. LIFECYCLE THEORY OF SAVINGS

5.1.6. 3 INTERMEDIATE WAYS TO GET MONEY

5.1.6.1. BANKS

5.1.6.1.1. EARN PROFIT BY CHARING MORE FOR THEIR LOANDS THAN THEY PAY FOR THE SAVINGS THEY RECEIVED

5.1.6.1.2. COMPETITION IN BANKING

5.1.6.2. BONDS

5.1.6.2.1. DOCUMENTS WHO OSED HOW MUCH AND WHEN PAYMENT MUST BE MADE

5.1.6.2.2. wale teeths BACK IN THE DAY ==> (FROM OUI)

5.1.6.3. STOCK MARKET

5.1.6.3.1. BUSINESS CAN USSUE STOCK, OR SHARES OF OWNERSHIP

5.1.6.3.2. STOCKS ARE TRRADED ON ORGANIZED MAKRETS CALLED STOCK EXCHANGES

5.1.6.3.3. NEW STOCK OFTEN FOR INVESTMENT PURPOSES

5.2. KEYSPEAKER arnoud boot

5.2.1. BANKS VS FINTECH

5.2.1.1. fintech

5.2.1.1.1. leading

5.2.1.1.2. SECURIZATION

5.2.1.1.3. automatized

5.2.1.1.4. phone balance

5.2.1.1.5. OFFER:

5.2.1.2. DIFFERENCE ^ BETWEEN:

5.2.1.3. banks

5.2.1.3.1. licensed

5.2.1.3.2. still safe

5.2.1.3.3. banks are trying to keep up with fintech's

5.2.2. Africa uses mobile transacations

5.2.2.1. this is because of "no interest"/

5.2.3. India

5.2.3.1. FINTECH

5.2.3.1.1. basis of ....

5.2.4. Netherlands

5.2.4.1. World champion mortgage debt

5.2.4.1.1. We do some things wrong:

5.2.5. rent

5.2.5.1. higher compensation for services than needed to maintain this service

5.2.5.1.1. "rent seeking"

5.2.6. FINANCIAL SECTIOR THERE FOR?

5.2.6.1. TRANSACTIONS VS RELATIONSHIPS

5.2.7. FINTECH will change BANKS forever

5.2.7.1. will we have banks in 25 years?

5.2.8. Financiang constraints are not new

5.2.9. TOOLS/INSTRUMENTS:

5.2.9.1. Pricing externalities

5.2.9.2. Reward positive impact

5.2.9.3. Participate

5.2.9.4. Stimulate the market

5.2.9.5. KEY ARE INCENTIVES

5.2.10. OWNER QUITY

5.2.10.1. owner equity: the vallue of the asset minus the debt, or E= V - D

5.2.10.1.1. E = V - D

5.2.11. LEVERAGE RATIO

5.2.11.1. the ratio of debt to equity, or D/E

5.2.11.1.1. AND!! D / E SO IT'S A TRIANGLE

5.3. friday lecture

5.3.1. GDP

5.3.1.1. ALSO LOOK AT INCOME, PURCHASING POWER PARITY (PPP), 'HAPPINESS'

5.3.1.1.1. gdp overlooks things.

5.3.1.2. PRODUCTION IS NOT THE SAME AS WEALTH

5.3.1.3. GDP is taxed/added to the place where it is regsiterered.

5.3.2. supply and demand

5.3.2.1. MONEY needs to be stored (rich) that's why it different than normal s en d curve.

5.3.3. crowding out

5.3.3.1. important

5.3.3.1.1. government takes money out of the market to be productive Is this crowding out outweighing the private investments?

5.3.3.1.2. because a lot of companies are able to be more efficient with this money, instead of gov making roads or whatever

5.3.3.2. meaning CROWDING OUT=

5.3.3.2.1. the decerase in private consumption and investments that occurs when goverment borrows more

5.3.4. bond prices and interest rates

5.3.4.1. face value

5.3.4.1.1. value of a bond at maturity is called the

5.3.4.1.2. AT MATURITY!

5.3.4.2. rate of return

5.3.4.2.1. interest rate =

5.3.4.3. formula

5.3.4.3.1. = (FV - price)/(price) * 100

5.3.4.4. equally risky assets must have the same rate of return (correlated).

5.3.5. bagehot

5.3.5.1. banks wants to put your money into a project

5.3.6. financial crisis 07 08

5.3.6.1. mistrust and liquidity problems (bankrun)

5.3.6.2. decrease in house prices

5.3.6.3. bank failures and panics

5.4. COWEN & TABARROK H27 H29:

5.4.1. h27

5.4.1.1. term

5.4.1.1.1. key facts about wealth of nations and economic growth

5.4.1.1.2. economic growth

5.4.1.1.3. physical capital

5.4.1.1.4. human capital

5.4.1.1.5. technical knowledge

5.4.1.1.6. insititutions

5.4.1.1.7. free rider

5.4.1.1.8. economies of SCALE

5.4.1.2. insititutions of economics growth (!!)

5.4.1.2.1. 1 PROPERTY RIGHTS

5.4.1.2.2. 2 HONEST GOVERNMENT

5.4.1.2.3. 3 POLITICAL STABILITY

5.4.1.2.4. 4 DEPENDABLE LEGAL SYSTEMS

5.4.1.2.5. 5 OPEN AND COMPETITIVE MARKETS

5.4.2. h29

5.4.2.1. terms

5.4.2.1.1. savings

5.4.2.1.2. investments

5.4.2.1.3. time preference

5.4.2.1.4. market for loanable funds

5.4.2.1.5. collateral

5.4.2.1.6. arbitrage

5.4.2.1.7. crowding out ^ IMPORTANT

5.4.2.2. financial intermediaries

5.4.2.2.1. bank

5.4.2.2.2. bond

5.4.2.2.3. STOCK MARKETS

5.4.2.3. a stock

5.4.2.3.1. SHHARE IS A CERTIFICATIE OF OWNERNSHIP IN A CORP.

5.4.2.4. IPO

5.4.2.4.1. first time a stock is sold to the public

5.4.2.5. 3 IMPORTANT TERMS

5.4.2.5.1. borrow to smooth consumpton

5.4.2.5.2. owner equaty

5.4.2.5.3. leverage ratio (!!!)

5.4.2.5.4. insolvement

5.4.2.6. TAXATION

6. WEEK 6

6.1. monday lecture

6.1.1. money is a means.

6.1.2. gdp fluctuates aroundd the average GDP

6.1.3. flucuations in the growth rate of real GDP around it trend grwtoh rate

6.1.3.1. BUSINESS FLUCTUATIONS =

6.1.4. Signifcant, widespread decline inr eal income and employment

6.1.4.1. RECESSION =

6.1.5. an increase in the average level of prices (measure by changes in price index)

6.1.5.1. INFLATION =

6.1.5.2. INFLATION RATE (pi) percantage change in a price index from on year to the next = (P2-P1)/(P1)*100 P1= YEAR 1 P2= YEAR 2

6.1.5.3. INFLATION COMES FROM PRNTING MONEY (CORONA E.G. MAX TORNOW)

6.1.6. .

6.1.7. IRVING FISHER

6.1.7.1. QUANTITY IDENTITI OF MONEY = M x v = P x YR M= MONEY SUPPLY P = PRICE LEVEL (INFLATION) V = VELOCITY OF MOENY YR = REAL GDP ince M x v is the total amount spend ont final goods and service P x YR is the price level times real GDP

6.1.8. The AD/AS MODEL

6.1.8.1. 1. aggregate demand curve AD

6.1.8.1.1. --> M + -->v = -->P + -->Yr -->M is growth rate of the money supply -->v = growth in velocity (relaten to growth cosnumption) -->P = inflation -->YR = real GDP

6.1.8.1.2. shows all the combinations of inflation and real growth that are consistent with a speciied rate of spending growth (M x V) = growth

6.1.8.1.3. SHIFT IN AGGREGATE DEMAND

6.1.8.2. 2 The long run aggragate supply curve (LRAS)

6.1.8.2.1. = vertical at the solow growth rate - independent of inflation rate (P)

6.1.8.2.2. (BOB SOLOW - SOLOW GROWTH MODEL)

6.1.8.2.3. AD AND LRAS real shocks

6.1.8.3. 3 The short run aggregate supply curve (SRAS

6.1.8.3.1. = shows the positive relation between the inflation and real growth during the period when prices and wages are sticky ( need time to adjust ). (P and M) - STICKY

6.1.8.3.2. JOHN MAYNARD KEYNES explained that when prices were not perfectly flexible (takes time! - gets people into a money) illusion, deficiencies in aggregate demand could generate recessions

6.1.8.3.3. SHIFT IN AGGREGATE DEMAND

6.1.9. PUBLIC GOODS (e.g. asteroid deflection) key roles for GOVERNMENT

6.1.9.1. NON-EXCLUDABLE

6.1.9.1.1. = a good is non-exlcudable if people who dont pay cannot be easuily prevented from using the good (e.g. park)

6.1.9.2. NON-RIVAL

6.1.9.2.1. = a good is non-rival if ones person use of the good does not reduce the ability to another person to use the same good (e.g. Asteroid)

6.1.9.3. FREE RIDERS: someone who enjoys the benefits of a public good without paying s hare of the costs

6.1.9.3.1. taxation means that some people wil be turned in to FORCED RIDERS

6.1.9.4. TRAGEDY OF THE COMMONS = NON-EXCLUDABLE, but RIVAL. (kitchen student house) = free riding on the cleaning

6.1.9.5. CLIMATE CHANGE

6.1.9.5.1. hits especially the poor

6.1.9.6. INTERNATINAL AGREEMENT is needed, but is difficult. (shows in welfare gains from carbon diooxide world)

6.2. KEYSPEAKER S van Wijnbergen

6.2.1. GLOBAL ISSUES / ENVIROMETANL ISSUES ( POLUTION )

6.2.2. IS ECONOMIC GROWTH ALLOCATING THE ENVIROMENTAL ISSUE

6.2.3. COAL IS THE REAL THROAT!

6.2.3.1. STOPPING WITH COAL NOW WOULD SOLVE THE CLIMATE PROBLEM

6.2.3.2. NOT LIKELY TO HAPPEN, so the climate problem is HUGE.

6.2.4. MAIN ISSUE is climate change (fossil)

6.2.4.1. tempreature

6.2.5. world was dirtier back then, at least not for pollution.

6.2.6. pollution effects are national (rising wealth) or are cross border (policies innefective and free rdiers)

6.2.6.1. most pollutions are local

6.2.7. CO2

6.2.7.1. IS INTERNATIONAL

6.2.8. the DICE MODEL (nobel)

6.2.8.1. discounting

6.2.9. FULL PARTICIPATION

6.2.9.1. FREE RIDER PROBLEM (50%)

6.2.10. CHINA / INDIA PROBLEM (why whould we suffer from west/US industrialization)

6.2.11. BIOFUELS

6.2.12. DEPITE RENEWABLES (GAS), COAL IS NOT GOING AWAY...

6.3. COWEN & TABARROK H19, H 32, H 37

6.3.1. h37

6.3.1.1. terms

6.3.1.1.1. fiscal policiy

6.3.1.1.2. what happens to M + V = P + r if policies help with "spending more"?

6.3.1.1.3. multiplier effect

6.3.1.1.4. the limits of fiscal policiy 1 CROWDING OUT 2 A DROP IN THE BUCKET 3 MATTER OF TIMING 4 REAL SHOCKS

6.3.1.1.5. ricardian equivalance

6.3.1.1.6. automatic stabilizers

6.3.1.1.7. .

6.3.1.1.8. SOME COUNTRIES (ARGENTINA) TAKE THE FISCAL POLICY TOO FAR AND THEY GET INTO DEBT

6.3.1.1.9. when is fiscal policy a good idea? (!!)

6.3.1.1.10. fiscal policy is for short -term not for long -term IN SUM

6.3.2. h32

6.3.2.1. terms

6.3.2.1.1. ----------------------------

6.3.2.1.2. business fluctuations

6.3.2.1.3. recessions

6.3.2.1.4. aggregate supply shocks

6.3.2.1.5. aggreagte demands shocks

6.3.2.1.6. aggreagate demand curve

6.3.2.1.7. long run aggregate supply curbe

6.3.2.1.8. SOLOW GROWTH RATE !!!

6.3.2.1.9. real shocks (2)

6.3.2.1.10. aggregate demand shock

6.3.2.1.11. short run aggregate supply curve

6.3.2.1.12. sticky

6.3.2.1.13. nominal wage confusion

6.3.2.1.14. menu costs

6.3.2.1.15. .

6.3.2.1.16. prices rices like rockets, but fall like feathers.

6.3.2.1.17. changes in v (RATE OF SPENDING)=

6.3.2.1.18. CHANGES IN V CAN BE BROKEN DOWN INTO CHANGE IN C, I, G, NX.

6.3.2.1.19. KNOW

6.3.2.1.20. ---------------------

6.3.3. h19

6.3.3.1. 4 typs of goods

6.3.3.1.1. NON EXCLUDABLE * 4 GOODS * ASK MYSELF =

6.3.3.1.2. NON RIVAL

6.3.3.2. 1 public goods

6.3.3.2.1. NONEXDUDABLE AND NONRIVAL

6.3.3.3. 2 private goods

6.3.3.3.1. EXUDABLE AND RIVAL

6.3.3.4. 3 club goods

6.3.3.4.1. EXCLUDABLE AND NONRIVAL

6.3.3.5. 4 common resources

6.3.3.5.1. NONEXLUDABLE BUT RIVAL

6.3.3.6. free rider

6.3.3.6.1. ENJOYS THE BENEFITS OF A PUBLIC GOOD WITHOUT PAYING S ASHAR EOF THE COSTS

6.3.3.7. forced riders

6.3.3.7.1. WHO PAYS A SHARE OF THE COSTS OF A PUBLIC GOOD BUT WHO DOES NOT ENJOY THE BENEFITS

6.3.3.8. tragedy of the commons

6.3.3.8.1. AND

6.3.3.8.2. IS THE TENDENCY OF ANY RESOURVE THAT IS UNOWNED AND HENCE NONEXCLUDABLE TO BE OVERUSED AND UNDERMAINTAINED

6.3.3.8.3. CAPITAL STUFFING:

6.3.3.8.4. PROPERTY RIGHT MAY PREVENT TRAGEDY OF THE COMMONS

6.3.3.9. PROPERTY RIGHTS!

6.3.3.9.1. Property rights are theoretical socially-enforced constructs in economics for determining how a resource or economic good is used and owned. Resources can be owned by (and hence be the property of) individuals, associations, collectives, or governments.

7. WEEK 8

7.1. monday lecture (live) !!!

7.1.1. 1

7.1.1.1. HAYEK VS KEYNES

7.1.1.1.1. SPEED OF THE PRICE

7.1.1.2. RICH VS POOR (INFLATION)

7.1.1.2.1. INFLATION IS AN EQUALIZER (PEOPLE WHO HAVE WEALTH, SEE THEIR WEATLH INCREASE; PEOPLE WHO HAVE DEBT SEE THEIR DEBT INCREASE) = A BAD THING (FOR MOST).

7.1.1.3. FISCAL POLICY: TAXES/SPENDNG/BORROWING DESIGNED TO INFLUENCE BUSINESS FLUCTUATIONS (CHAPTER 37)

7.1.1.3.1. FISCAL POLICY IN A RECESSION: - SPEINDING CAN BE ICREASTED THROUGH HIGHER PRIVATE AND GOVERNMENT CONSUMPTION, AS WELL AS INVESTMENTS (AMSTERDAMSE BOS AVAILABLE FOR EVERYONE) - ONE MANDS SPENDING IS AN TOHERS MANS INCOME

7.1.1.3.2. 👇

7.1.1.4. LIMITATIONS OF FISCAL POLICY - REQUIRES A CREDIBLE GOVERNMENT - MONEY MUST COME FROM INCREASED TAXES OR BORROWING - DIFFICULT - CROWING OUT: GOVERNMENT SPENDING MAY FURTHER REDUCE PRIVATE SPENDING - INCREASED SPENDING VIA TAX CUTS: 'RICARDIAN EQUIVALANCE'

7.1.1.5. RICARDIAN EQ: ULTIMATELY REDUCED TAXES (BORROWING GOVERNMENT NOW!) IS A LOAN FROM THE FUTURE. IT NEEDS TO BE REPAYED AGAIN.

7.1.1.5.1. HIGHER TAXES TODAY = HIGHER TAXES IN THE FUTURE, SO ISTEAD OF SPEDING THEIR TAX CUT, THEY SAVE IT TO PAY FUTURE TAXES

7.1.1.6. ECONOMICS IS THOGUHER THAN PHYSICS OR SCIENCE BECAUSE PEOPLE ARE REACTIVE. (take in mind for making assumptions)

7.1.2. 2

7.1.2.1. GOVERNMENT STIMULUS CAN BEA GOOD IDEA IF - UNDERSEMPLOYED RESOURCCES DUE TO FALL IN AD - PRICES AND INFLATIONS EXPECTATIONS TAKE TIME TO ADJUST - INCREASED IDLE SAVINGS - GROWTH - CREDIT WORTH - GOOD REPUTATION ----- MULTIPLIER EFFECT

7.1.2.2. NON EXCLUDABLE GOES NOT HAND IN HAND WITH THE PRICE NOTIONS OF HAYEK BECAUSE FREE RIDERS CAN NOT BE TAXED

7.1.2.3. BY TAXING EVERYONE TO PAY FOR THE PUBLIC GOOD, GOVERNMENT CAN MAKE PEOPLE BETTER OFF

7.1.2.4. HARD TO FUGRE OUT AMOUNT AND OPTIMAL TAXATION

7.1.2.5. CLIMATE CHANGE - FASTER THAN EXPECTED ; SWEDE VAN WIJNBERGEN; SOCIAL COSTS OF CARBON ESPECIALLY FOR THE POOR

7.1.2.6. CARBON OFSETTING IS A REDUCTION IN EMISSIONS OF CARBON DIOXIDE MADE IN ORDER TO COMPENSAFE FOR EMISSIONS MADE ELSEWHERE

7.1.2.7. 1: CAP ON CARBON- 2: COMPANY INVESTS INS EMSSIONS AND PROEJCTS THAT PRODUCE CARBON OFFSET 3: COMPANY RECEIVES CREDIT FOR ITS INVESMENT

7.1.2.8. EVERYONE TAXED BY CARBON OFFSET (NEW NORMAL FUTURE)

7.1.3. 3

7.1.3.1. GOVERNMENT CAN HELP, BUT ITS COMPLEX AND CAN BACK FIRE

7.1.3.2. YET EVEN GOOD FISCAL POLICITY DOESN'T ALWAYS DO A LOT FO GOOD BAD FISCALP POLICIES

7.1.4. 4 ENDTERM

7.1.4.1. ALL THE MATERIAL IN THE COURSE

7.1.4.2. 25 TO GET A 5.0!

7.1.4.3. USE PREVIOUS EXAMS

7.1.4.4. DIGITAL FORMATIVE ASSESMENTS QUESTIONS!

7.1.4.5. open questions= WRITE DOWN AS MUCH AS POSSIBLE SO I CAN SCORE POINTS.

8. INTERMEZZO: DIGITAL FORMATIVE ASSESSMENTS

8.1. 1

8.1.1. 1. OPPORTUNITY COSTS IS THE AMOUNT OF MONEY LOST DOING THE OTHER THING

8.1.2. 2. COMPARATIVE ADVANTAGE

8.1.3. 3. MARIGINS ARE JUST A BIT MORE, OR JUST A BIT LESS

8.1.3.1. OPTIMAL DECISIONS ARE BEING MADE AT THE MARIGINS

8.2. 2

8.2.1. QUANTITY DEMANDED

8.2.1.1. LAW OF DEMAND

8.2.1.1.1. The law of demand states that quantity purchased varies inversely with price, so the higher the price, the lower the quantity demanded.

8.3. 3

8.3.1. .

8.3.2. 4

8.3.2.1. ACCOUNTACY/ECONOMIC COSTS

8.3.2.2. ECONOMICS IS EASY MATH

8.3.2.2.1. BUT...

8.3.3. 5

8.3.3.1. FISCAL POLICY

8.3.3.2. LABOUR PRODUCTIVITY =

8.3.3.2.1. amount of output per hour of labor.

8.3.3.3. P2 - P1 / P1 *100%

8.3.3.4. physical capital, human capital, and technological knowledge ( those are the factors of production) !

8.3.3.4.1. PLUS:

8.3.3.5. GOOD TO KNOW

8.3.4. 6

8.3.4.1. -

9. SUMMARY OF PRINCIPLES OF ECONOMICS 1 (UvA - EBE/BA) IN KEYWORDS