Unit 1 : PPG Graphs

Trade-offs : alternative chooses that people face while making an economical decision

Opportunity Cost : the most desirable alternative giving b making a decision.

PPG- Production Possibilities Graph : show  alternative ways to use resources

PPC - Curve

Image result for economic ppg graphPPF- frontier   

Inside of the curve - under-utilization , unemployment , recession, underemployment   

On the curve - Point A- E ; efficient & Attainable

Outside of the curve - Point G

  • Economic growth
  • technology         
      3 type of movement of the PPC   
  1. Inside the PPC     
  2. Along the PPC
  3. Shifts of the PPC
Key Assumptions       
  1. 2 goods are produce 
  2. Fixed resources
  3. Fixed technology 
  4. Full employment 
  • Full employment  
     4 to 5% unemployment 
     90% factory capacity 
       5. No international trades 

Comments

Post a Comment

Popular posts from this blog

Unit 3: Fiscal Policy

Changes in the expenditures or tax revenues of the federal government 2 tools of fiscal policy Taxes: government can increase or decrease taxes Spending: government can increase or decrease If government increase taxes then they decrease spending and vice versa depending on if recession or not. If in recession then spend money  Fiscal policy is enacted to promote our nation's economic goals: full employment, price stability, economy grown Deficits, Surplus, and Debt Balanced budget Revenues = expenditures Budget deficit Revenues < Expenditures Budget Surplus Revenues > Expenditures Government Debt Sum of all deficits - Sum of all surpluses Government must borrow money when it runs a budget deficit Government borrows from Individuals (taxes) Corporations (taxes) Financial institutions foreign entities or foreign governments Fiscal Policy Two Options Discretionary Fiscal Policy (ACTION) Expansionary Fiscal Policy - think defi
Read more

Unit 3: The AS/AD models

Image
The equilibrium of AS &AD determines current output (GDPr) and the price level Full employment - equilibrium exists where AD intersects SRAS & LRAS at the same point  Recessionary Gap- a recessionary gap exists when equilibrium occurs full employment output. Inflationary Gap- an inflationary gap exists when equilibrium occurs beyond full employment output  U% - unemployment 𝝅% - inflation  3 Ranges of AS   Keynesian of horizontal range Not fully using all of the resources Could be a recession or depression (not where need to be) below full employment  Intermediate Resources are getting closer to full employment, which creates upward pressure on wages and price  Classical or vertical range Real GDP is at a level with unemployment  at the full employment level where any increase in demand  will result only in an increase in prices Demand pull inflation (Always increasing ) Increase in price level resulting from increase in total
Read more