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Questions and Answers
What is the main focus of microeconomics?
What is the main focus of microeconomics?
What is the primary goal of monetary policy?
What is the primary goal of monetary policy?
What is the term for the study of economy-wide phenomena such as economic growth, inflation, and unemployment?
What is the term for the study of economy-wide phenomena such as economic growth, inflation, and unemployment?
What is the main tool of fiscal policy?
What is the main tool of fiscal policy?
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What is the benefit of international trade based on comparative advantage?
What is the benefit of international trade based on comparative advantage?
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What is the term for the action of a central bank to reduce the money supply and inflation?
What is the term for the action of a central bank to reduce the money supply and inflation?
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What is the term for the study of individual economic units such as consumers and firms?
What is the term for the study of individual economic units such as consumers and firms?
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What is the goal of expansionary fiscal policy?
What is the goal of expansionary fiscal policy?
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What is the term for the trade barriers that restrict the quantity of goods that can be imported?
What is the term for the trade barriers that restrict the quantity of goods that can be imported?
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Study Notes
Microeconomics
- Study of individual economic units such as:
- Consumers
- Firms
- Markets
- Examines how these units make decisions about:
- Resource allocation
- Price determination
- Key concepts:
- Opportunity cost
- Supply and demand
- Market equilibrium
- Consumer behavior (utility maximization)
- Firm behavior (profit maximization)
Monetary Policy
- Actions of a central bank to control:
- Money supply
- Interest rates
- Goals:
- Price stability
- Maximum employment
- Moderate long-term interest rates
- Tools:
- Open market operations
- Reserve requirements
- Discount rates
- Contractionary policy: reduces money supply and inflation
- Expansionary policy: increases money supply and stimulates economy
Macroeconomics
- Study of economy-wide phenomena such as:
- Economic growth
- Inflation
- Unemployment
- International trade
- Examines factors affecting:
- Gross Domestic Product (GDP)
- National income
- Aggregate demand and supply
- Key concepts:
- Business cycles
- Fiscal policy
- Monetary policy
- International trade and finance
Fiscal Policy
- Use of government spending and taxation to:
- Promote economic growth
- Reduce unemployment
- Control inflation
- Tools:
- Government expenditures
- Taxation
- Expansionary fiscal policy: increases government spending and/or cuts taxes
- Contractionary fiscal policy: reduces government spending and/or increases taxes
- Fiscal policy challenges:
- Crowding out private investment
- Inflationary pressures
- Budget deficits
International Trade
- Exchange of goods and services across national borders
- Benefits:
- Comparative advantage
- Increased efficiency
- Economic growth
- Trade barriers:
- Tariffs
- Quotas
- Embargoes
- Trade agreements:
- Free Trade Agreements (FTAs)
- Customs Unions
- Common Markets
- International trade theories:
- Absolute advantage
- Comparative advantage
- Gains from trade
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Description
Study of economics concepts including microeconomics, macroeconomics, monetary policy, fiscal policy, and international trade. Learn about key concepts, tools, and challenges in each area.
