Economics

• The government can use fiscal policy to influence the economy by changing tax rates, spending levels, or both.
• Monetary policy involves adjusting interest rates and money supply to control inflation and promote growth.
• Fiscal policy is used when monetary policy alone cannot achieve desired economic outcomes.
• A supply schedule shows how much firms will produce at various prices over a certain period of time
• Relative price is when we compare the prices of different goods
• Expansionary fiscal policy is used during recessions, while contractionary fiscal policy is used when inflation is high.
• Fiscal policy is used when monetary policy has reached its limits.
• Fiscal policy is used when there are fluctuations in economic activity, while monetary policy is used to maintain price stability.
• Monetary policy involves adjusting interest rates and money supply to achieve economic goals.
• Government intervention through regulation aims to protect consumers from unfair practices and ensure fair competition among businesses.
• Interest rate changes affect borrowing costs and investment decisions.
• Regulation also helps prevent market failures such as externalities (unintended consequences) and public goods (goods that cannot be excluded).
• Demand refers to the quantity that buyers are willing and able to purchase at different price points during a specific time frame
• Demand refers to the quantity that consumers are willing and able to buy at different price points within a given time frame
• Equilibrium occurs where demand equals supply, with no excess inventory or shortages
• Absolute price is when we look at one good's price compared to another
• Market equilibrium is achieved through competition between buyers and sellers, leading to an optimal allocation of resources
• Market equilibrium occurs where demand equals supply, resulting in an efficient allocation of resources
• Income elasticity measures how sensitive demand is to changes in income
• Cross-price elasticity measures how sensitive demand is to changes in other products' prices
• Inelastic goods have low responsiveness to changes in price, while elastic goods have high sensitivity to price fluctuations
• Deflation is a decrease in the overall level of prices in an economy.
• The government can use taxation or spending to influence aggregate demand.
• Inflation occurs when there are more dollars chasing too few goods, leading to an increase in general prices.
• Government intervention through fiscal policy aims to stabilize the economy and prevent extreme fluctuations in output and employment.
• Government expenditure includes public services such as education, healthcare, defense, and infrastructure projects like roads and bridges.
• The government can use taxation or spending to influence aggregate demand (AD) and output.
• Transfer payments are made by the government without any conditions attached, such as unemployment benefits and pensions.
• The central bank can use open market operations (buying or selling government bonds) to increase/decrease the money supply.
• Open market operations involve buying or selling government securities by the central bank to influence the money supply.
• Regulation can be seen as an example of government failure due to the potential for bureaucratic inefficiencies and corruption.
• Regulation can be seen as an example of government failure due to the potential for bureaucratic inefficiencies and corruption.
• The role of the state includes providing public goods such as national defense, law enforcement, education, healthcare, infrastructure development, and social welfare programs.
• Inflation targeting is a type of monetary policy where the central bank aims to keep inflation within a specific range.
• Money supply refers to the total amount of money available in an economy.
• Public goods have non-rivalry (consumption by one person does not reduce availability) and non-excludability (cannot exclude people from consuming).
• Open market operations involve buying or selling government securities to influence the money supply.
• Taxes include income taxes, sales taxes, property taxes, and excise duties on specific products.
• Quantitative easing involves increasing the money supply by purchasing assets such as bonds.
• The government can use fiscal policy to influence the economy by changing taxation or spending levels.