tag:blogger.com,1999:blog-37655564600406319322024-03-21T08:33:04.204-07:00Business block BSpeak little, do much...............UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.comBlogger39125tag:blogger.com,1999:blog-3765556460040631932.post-2095600020481700532010-01-18T18:55:00.000-08:002010-01-18T18:56:45.871-08:00Chapter 6 ( summary)<meta equiv="Content-Type" content="text/html; charset=utf-8"><meta name="ProgId" content="Word.Document"><meta name="Generator" content="Microsoft Word 11"><meta name="Originator" content="Microsoft Word 11"><link rel="File-List" href="file:///C:%5CDOCUME%7E1%5CADMIN%7E1.MIC%5CLOCALS%7E1%5CTemp%5Cmsohtml1%5C01%5Cclip_filelist.xml"><!--[if gte mso 9]><xml> <w:worddocument> <w:view>Normal</w:View> <w:zoom>0</w:Zoom> <w:punctuationkerning/> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> <w:compatibility> <w:breakwrappedtables/> <w:snaptogridincell/> <w:wraptextwithpunct/> <w:useasianbreakrules/> <w:dontgrowautofit/> </w:Compatibility> <w:browserlevel>MicrosoftInternetExplorer4</w:BrowserLevel> </w:WordDocument> </xml><![endif]--><!--[if gte mso 9]><xml> <w:latentstyles deflockedstate="false" latentstylecount="156"> </w:LatentStyles> </xml><![endif]--><style> <!-- /* Font Definitions */ @font-face {font-family:Wingdings; panose-1:5 0 0 0 0 0 0 0 0 0; mso-font-charset:2; mso-generic-font-family:auto; mso-font-pitch:variable; mso-font-signature:0 268435456 0 0 -2147483648 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} @page Section1 {size:595.3pt 841.9pt; margin:2.0cm 42.5pt 2.0cm 3.0cm; mso-header-margin:35.4pt; mso-footer-margin:35.4pt; mso-paper-source:0;} div.Section1 {page:Section1;} /* List Definitions */ @list l0 {mso-list-id:350304429; mso-list-type:hybrid; mso-list-template-ids:510272368 -1067549378 68747267 68747269 68747265 68747267 68747269 68747265 68747267 68747269;} @list l0:level1 {mso-level-start-at:0; mso-level-number-format:bullet; mso-level-text:-; mso-level-tab-stop:36.0pt; mso-level-number-position:left; text-indent:-18.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"Times New Roman";} ol {margin-bottom:0cm;} ul {margin-bottom:0cm;} --> </style><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Обычная таблица"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} </style> <![endif]--> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Fiscal policy<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">Fiscal policy is the taxation and spending decisions of the government. It’s one of the three main economic policies that government use. There are two other policies which are called monetary policy and supply-side policies. Government can change tax rates. The aim of fiscal policy is to influence aggregate demand. Government can raise AD to increase either by increase it’s spending or by reducing taxes. To increase AD government may raise it’s spending and cut taxes this is called reflationary, expansionary or loose fiscal policy. To reduce AD government reduces spending and raises taxes this is called deflationary, contractionary or tight fiscal policy.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">The nature of fiscal policy<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">Government may want to influence AD in order to make it match AS and so to avoid unemployment and inflation. If private sector demand (C+I+(x-m) is low government may try to increase AD, but if AD is high, government may try to reduce it. Government is seeking to create greater economic stability by offsetting changes in private sector spending.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">To achieve this objective, a government can use<span style=""> </span>something called discretionary fiscal policy, which is a change in government spending and taxation to influence AD. Or it can allow automatic stabilizers, which are forms of government spending and taxation that change automatically to offset fluctuations.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Types of taxes<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">The first most important source of tax revenue is income tax, and the second most important is value added tax(VAT). Income tax is a direct and progressive tax, a tax that takes a higher percentage from the rich peoples income. VAT is indirect and regressive tax, a tax that takes a greater percentage of the income of poor.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Government spending<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">Government spending, which is also called public spending or public expenditure can be divided into:<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left: 36pt; text-indent: -18pt;"><!--[if !supportLists]--><span style="" lang="EN-US"><span style="">-<span style=";font-family:";font-size:7;" > </span></span></span><!--[endif]--><span style="" lang="EN-US">Capital expenditure(e.g, hospitals, schools roads etc.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-left: 36pt; text-indent: -18pt;"><!--[if !supportLists]--><span style="" lang="EN-US"><span style="">-<span style=";font-family:";font-size:7;" > </span></span></span><!--[endif]--><span style="" lang="EN-US">Current spending (e.g public services, teachers pay etc)<o:p></o:p></span></p> <p class="MsoNormal" style="margin-left: 36pt; text-indent: -18pt;"><!--[if !supportLists]--><span style="" lang="EN-US"><span style="">-<span style=";font-family:";font-size:7;" > </span></span></span><!--[endif]--><span style="" lang="EN-US">Transfer payment ( e.g pensioners unemployed)<o:p></o:p></span></p> <p class="MsoNormal" style="margin-left: 36pt; text-indent: -18pt;"><!--[if !supportLists]--><span style="" lang="EN-US"><span style="">-<span style=";font-family:";font-size:7;" > </span></span></span><!--[endif]--><span style="" lang="EN-US">Debt interest payment ( e.g, payments made to holders of government debt)<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Budget<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">Budget provides information on the budget position in the past year and prediction for future years. Budget position shows relationship between<span style=""> </span>government spending and tax revenue. A budget deficit may occur because of the cyclical or structural factors. If there is a recession( fall in real GDP or negative growth), taxes revenue will likely to fall and government spending on benefits is likely to increase.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Monetary policy<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">Monetary policy is the government decisions on the rate of interest, the money supply and the exchange rates. Main monetary policy that is used almost in the whole world is the rate of interests. A higher interest rate may reduce consumption and lower firms investment. Rise in interest rates may decrease AD by reducing consumption, investment and exports minus imports.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Supply-side policies<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">It’s a policy that government use to increase aggregate supply by improving the efficiency of labour and product markets. There are some examples of supply-side policies. For example government invests in training, education, small firms, to encourage competitions. Training and education should raise the efficiency of labour and output per worker will be increased, potential output of the economy will rise, AS will shift to right. Government provides for unemployed people an educational and training courses, so they can raise their skills and experience.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Government assistance to new firms<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">New small firms provide employment, develop entrepreneurial skills, provide new ideas. But also they may find it difficult to break in established market. Government may help them buy subsidizing them charging low rate of corporation tax(a tax on firms, profit).<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Privatisation <o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">Privatasion is the transfer of assets from public sector to private sector. Some economists argue by saying that government shouldn’t intervene, they believe that private sector firms are in the best position to make decisions about what to produce, how to produce what to charge.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">But other economist think opposite. They argue that government should intervene, because of the high risks of the market failure.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Policies to reduce umenployment<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">Demand-side policies<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">Because of the unemployment, economy could be operating below it’s productive capacity, but unemployment may be reduced by increase in AD. In that case , expansionary fiscal or monetary policy could be used to create jobs. Increase in the money supply or lower interest rates are also likely to raise AD. A fall in interest rates or increase in money supply should stimulate consumption and investment.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">Supply-side policies<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">Unemployment may exist even if there is not shortage of AD, it’s because of the supply side problems. Those people who are out work when the level of AD is high. And inefficiency of labour, lack of skills can cause output to decrease. <o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">Supply-side policies can be applied to increase incentives and the quality of labour services offered by the unemployed.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Policies to control inflation<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">Cost-push inflation<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">If government thinks that inflation is caused by excessive increase in wage rates, it may try to stop an increase in wage rates. It can also restrict wage rises in both public and private sectors by introducing an income policy. Government may try to reduce firms cots by reducing corporation tax. This will have the advantage to stimulate investment. Government can even provide subsidies in order to help firms to cover their costs. But subsidies may be a failure if the firms will still be inefficient.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">Demand-pull inflation<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">In order to reduce demand-pull inflation government may use deflationary fiscal or monetary police instruments. These help to reduce inflation by lowering AD. Government could raise income tax. This would reduce people’s disposable income, and they will spend less.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Effectiveness of fiscal policy<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Advantages<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal" style="margin-left: 36pt; text-indent: -18pt;"><!--[if !supportLists]--><span style="" lang="EN-US"><span style="">-<span style=";font-family:";font-size:7;" > </span></span></span><!--[endif]--><span style="" lang="EN-US">Number of taxes, forms of government spending set automatically to offset Fluctuations in real GDP.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-left: 36pt; text-indent: -18pt;"><!--[if !supportLists]--><span style="" lang="EN-US"><span style="">-<span style=";font-family:";font-size:7;" > </span></span></span><!--[endif]--><span style="" lang="EN-US">Government spending and taxation, including cuts in corporation tax and training grants, have a chance to increase both AD and AS<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Disadvantages</span></i></b><span style="" lang="EN-US"><o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">It takes time for government spending and taxation to affect the economy.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">There is a time lag between introducing fiscal policy instruments.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">Number of government spending is inflexible( difficult to spending on health, education)<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">Based accurate information(a prediction saying that recession might lead to a change in expectations.)<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">Firms and households may react in unexpected ways( cut in income taxes etc)<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">Adverse effect on incentives and other macroeconomic objectives. <o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US">Can be offset by changes in the economic activities in other countries.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Possible conflicts between policy objectives<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">The objectives of economic growth and low unemployment may benefit from expansionary demand-side policy measures. Such a measures may make government to achieve low inflation and a satisfactory balance of payments position.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Methods of protection<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">International free trade occurs when there is no restrictions imposed on the movement of goods and services into and out of countries. Protectionism ( protection of domestic industries from foreign competitions) results in the careful restrictions of free movements of goods and services.<o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US">Voluntary export restraint(VER)<o:p></o:p></span></i></b></p> <p class="MsoNormal"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></p> <p class="MsoNormal"><span style="" lang="EN-US">It’s a limit placed on imports from a country with the agreement of that country’s government. A country may agree to restrict it’s exports in return for a similar limit being put on the exports of the other country.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-left: 18pt;"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left: 18pt;"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left: 18pt;"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left: 18pt;"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left: 18pt;"><span style="" lang="EN-US"><o:p> </o:p></span></p> <p class="MsoNormal" style="margin-left: 18pt;"><span style="" lang="EN-US"><o:p> </o:p></span></p> UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com1tag:blogger.com,1999:blog-3765556460040631932.post-18807581994036908472010-01-17T13:38:00.000-08:002010-01-17T13:40:27.744-08:00Chapter 5(summary)<span style="font-size:130%;">Chapter 5<br /><br /><span style="font-weight: bold;">Key performance indicators</span><br /><br />To find out how well an economy is performing, there are certain indicators that economist examine. One of the most significant of these is economic growth. Actual economics growth is said to occur when an economy increases it’s output. Long run, economic growth takes place when the productive capacity of an economy increases.<br /><br />When a county’s output increases, unemployment usually falls. An economy is doing well because of the low unemployment. Unemployment exists when people who are looking for jobs are without jobs. Some people aged between 16 and 65 are not in the labour force because, they are disabled, homemakers, retired or students. These people are said to be economically inactive.<br /><br />Another indicators is inflation, it’s caused when the price level rises. Also If the price levels falls it’s called deflation.<br />Balance of payments. This is record of country’s transactions with the rest of the world.<br /><br /><span style="font-weight: bold;">Government Objectives</span><br /><br />- Achieve economic growth<br />- Reduce Inflation<br />- Raise employment<br />- Reduce unemployment<br />- Balance of payment(international trade)<br />- Economic stability<br />- Income redistribution<br /><br /><span style="font-weight: bold;">GDP and real GDP</span><br /><br />Economists first calculate what is called money or nominal GDP. For example GDP of country may rise from $800 billion in 2008 to $900 billion in 2009, it’s 12,5% increase. Nominal GDP has risen by 12.5%. To calculate the rise in the volume of output, the effects of changes in the price level are taken out by multiplying GDP by the base year index divided by the current year price index.<br /><br />GDP figure*base year price index/current year price index.<br />So, if price index in 2008 was 100 and 105 in 2009, real GDP was:<br />$900 billion*100/105 = 857,14 billion<br />In real terms, GDP has risen by $57,14 billion/$800 billion*100%=7,14% <br /><br /><span style="font-weight: bold;">Measuring Unemployment</span><br /><br />Economists measure number of people who are unemployed and find the unemployment rate. These are people that are jobless and seeking employment. It is calculated as:<br /> The unemployment*100%/labour force.<br />In practice, it can be difficult to decide who is unemployed.<br /><br /><span style="font-weight: bold;">Measuring Inflation </span><br /><br />There are numbers of measures of inflation. The main measure of inflation is the consumer prices index(CPI).<br />Another measure of inflation used in the UK is Retailed prices indes(RPI)<br /><br /><span style="font-weight: bold;">The causes of economic growth</span><br /><br />In the short run, an economy with the spare capacity can cause economic growth, which increases aggregate demand. For example a fall in exchange rate may increase net exports and result in export-led growth.<br /><br />There may also be consumption-led growth. Or a growth caused by investment.<br /><br /><span style="font-weight: bold;">Types of Unemployment</span><br /><br />Cyclical: Unemployment arising from a lack of Aggregate demand.<br /><br />Structural: Unemployment caused by the decline of some industries due to changes in demand and supply.<br /><br />Frictional: Short term unemployment when workers are in-between jobs.<br /><br /><span style="font-weight: bold;">Types of Inflation </span><br /><br />Demand-pull inflation: Rise in the price level caused by an increase in aggregate demand.<br /><br />Cost-push inflation: Rise in the price level caused by increase in the costs of production.<br /><br /><span style="font-weight: bold;">Causes of deficit and surplus on the current account</span><br /><br />A deficit on the current account occurs when government spending are higher than the revenue.<br />Which is more imports than exports.<br /><br />A surplus on the current account occurs when country’s revenue from abroad is greater then the government spending. Mainly it means exports exceeds imports.<br /><br /><span style="font-weight: bold;">Hysteresis</span><br /><br />It’s when unemployment causes problems. The longer people are out work, it will be more difficult for people to gain jobs.<br /><br /><span style="font-weight: bold;">The costs and benefits of economic growth</span><br /><br />Economic growth may have costs. Economy is using all of it’s resources, and thus producing in it’s production possibility curve, the only way it may increase it’s output is to switch resources from making consumer goods to capital goods.<br /><br />Most governments believe that benefits of economic growth exceeds the costs. The main benefit of economic growth is the rise of people’s standard living, and the rise in the real GDP. Economic growth reduces the level of poverty. Because the money coming from taxes can be used to help poor.<br /><br /><span style="font-weight: bold;">Exchange rates</span><br /><br />It’s the price of the currency in the terms of another currencies.<br />The main factors which influence the demand for and supply of a currency and so it’s exchange rate.<br /><br />- The demand for pound is likely to be high and supply is likely to be low if UK products are internationally competitive.<br />- Changes in income abroad influences the exchange rate.<br />- Rising incomes at home may have a downward pressure on the value of pound.<br />- Rise in UK interest rates, according to other countries interest rates, will be likely to increase demand for pounds.<br />- Pounds are also brought and sold by those who are wishing to undertake foreign direct investment(FDI).</span>UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com1tag:blogger.com,1999:blog-3765556460040631932.post-68731212302135013612010-01-17T13:20:00.000-08:002010-01-17T13:37:55.911-08:00Chapter 4(summary)<span style="font-weight: bold;">CHAPTER 4 AGGREGATE DEMAND AND AGGREGATE SUPPLY AND THEIR INTERACTION.</span>
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<br /><span style="font-weight: bold;">Aggregate demand</span>
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<br /><span style="font-size:130%;">Aggregate demand is the total demand for goods and services produced in an economy at a given price level and time period. This expenditure comes from households, government, firms and foreigners. It’s made up of C+I+G+(X-M), which is Consumption + Investment + Government spending + net exports (which is Exports – Imports.)
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<br />If country has a trade surplus, which means exports are more than imports, but if we ad to it C + I + G that will increase aggregate demand. If the country has trade deficit, this means aggregate demand would be lower than domestic demand.
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<br />Consumer expenditure
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<br />Range of influences, how much households spend? They include:
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<br />-Real disposable income. For example richer, spend more than poor. They have more money to spend. The income which is spent is called Average propensity to consume (APC) may fall as disposable income rises. For example an office worker which is earning 10000$ a week will spend more than teacher earning 1000$ per week. An office worker can spend 7500$ per week, while the teacher will spend 900$. In this case the teaches has higher APC- 0,90 (900$/1000$) than and office worker who has an APS of 0.75 (7500$/10000$)
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<br />-Consumer confidence and expectations: It’s when consumers feel optimistic about the future. Because of their over confidence they spend more.
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<br />Saving
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<br />Influences on saving include:
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<br />- Real disposable income
<br />- The rate of interest
<br />- Confidence and expectations
<br />- Saving schemes
<br />- Range of financial institutions
<br />- Government policies
<br />- The age structure of the population
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<br />Investment
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<br />Influences on investment include:
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<br />- Change in real disposable income
<br />- Expectations
<br />- Capacity utilization
<br />- Current profit levels
<br />- Corporation tax
<br />- The rate of interest
<br />- Advances in technology
<br />- Price of capital equipment
<br />Government Spending
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<br />Government spending decisions are influenced by a number of factors. These include:
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<br />- The government view on the extent of market failure and it’s ability to correct it.
<br />- The level of economic activity in the economy can influence government spending.
<br />- A desire to please the electorate
<br />- War, terrorist attacks and rising crime, or their threat, can also boost government spending.
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<br />Net exports
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<br />The influences on export revenue and import expenditure are:
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<br />- Real disposable income abroad
<br />- Real disposable income at home
<br />- The domestic price level
<br />- The exchange rate
<br />- Government restrictions on free trad</span>e
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<br /></span></i></b></span></p><p class="MsoNormal"><span style="font-size:130%;"><b style=""><i style=""><span style="" lang="EN-US">Downward sloping AD curve<o:p></o:p></span></i></b></span></p> <p class="MsoNormal"><span style="font-size:130%;"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">Three effects which explain downward slope in AD:<o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">The wealth effect: Relates to a change in households and firms real wealth. Fall in the price level increases the amount of goods and services, that wealth kept in the form of money in bank accounts and other financial assets, can buy. Therefore rise in the price levels causes aggregate demand to contract.<o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US"><o:p> </o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">The rate of interest effect: Rise in the price level means that some people will sell assets to obtain more money to pay greater prices. A high interest rate may reduce consumption and investment. A fall in the price level will reduce the interest rate and cause an extension in AD, because of the higher consumption and investment.<o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US"><o:p> </o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">The international trade effect: Rise in the price level, but exchange rates and foreign prices had no change will make country’s products less internationally competitive. Households and firms will buy more from foreign producers and less from domestic producers. And net exports would fall causing AD to contract. So Ad curve slopes down from left to right, since the rise in price level will cause a decrease in monetary wealth and an increase in interest rate and country’s international competitiveness will be reduced.<o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US"><o:p> </o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><b style=""><i style=""><span style="" lang="EN-US">Aggregate supply<o:p></o:p></span></i></b></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">Aggregate supply is the total output of goods and services that producers in an economy are willing to supply at different price levels in a given time period.<o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US"><o:p> </o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">Any increase in output can be achieved by employing more efficient workers and new machinery’s. But as the resources become more scarcer, producers have to employ less efficient workers and new machinery’s. At full capacity it’s not possible to produce any more, even if the price level is really high.<o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">A change in AS means total output that produces are willing to so supply at a given price changes. A decrease in AS is represented by a shift to left, Increase in AS is represented by shift to right. The main change in AS are because of the changes in cost of production. If cost of production falls, AS will shift to right, causing an economics growth. Rise in the cost of productions will shift AS to left.<o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US"><o:p> </o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><b style=""><i style=""><span style="" lang="EN-US">Macro economic Equilibrium<o:p></o:p></span></i></b></span></p> <p class="MsoNormal"><span style="font-size:130%;"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">Occurs when Aggregate demand and Aggregate supply are equal.<span style=""> </span>When Aggregate demand and Aggregate supply are equal, there’s no reason for the economy’s output to change. Total output and price level will be stable.<o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US"><o:p> </o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">If Aggregate demand would be higher than aggregate supply, it would cause shortage of goods and services. Firms will extend their output to increase the total capacity. <o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">If the Aggregate supply exceeds aggregate demand, the economy would move back to equilibrium. This time unsold goods and services would contract aggregate supply.<o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><span style="" lang="EN-US">Anything that causes aggregate demand or aggregate supply to change will move the economy to new macroeconomic position.<o:p></o:p></span></span></p> <p class="MsoNormal"><span style="font-size:130%;"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></span></p> <p class="MsoNormal"><span style="font-size:130%;"><b style=""><i style=""><span style="" lang="EN-US">Output gap<o:p></o:p></span></i></b></span></p> <p class="MsoNormal"><span style="font-size:130%;"><b style=""><i style=""><span style="" lang="EN-US"><o:p> </o:p></span></i></b></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><span style="font-size:130%;">Output gap exists when economy is not producing at full capacity. Negative output gap occurs when economies actual output is less than it’s potential output. But opposite if this process causes positive output gap.</span><o:p></o:p></span></p> <p class="MsoNormal"><span style="" lang="EN-US"><o:p> </o:p></span></p>
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<br />i have more pictures but i can't upload them. I don't no why(
<br />UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-25562481525870429872009-12-02T12:38:00.000-08:002009-12-02T13:58:01.968-08:00Tim Harford --- How to lie with Economic Statistics<!-- end #title --> <div class="entry"> </div><br />Tim Harford is a member of the Financial Times editorial board. His column, “The Undercover Economist”, which shows the economic ideas behind everyday experiences, is published in the Financial Times Newspaper and formed around the world. He is also the only economist in the world to run a problem page called “Dear Economist”, in which readers personal problems are answered with the latest economic theory.<br /><div class="entry"> <p><img class="thumb" title="Tim Harford" src="http://farm1.static.flickr.com/149/366352945_d0b62c1aa2_m.jpg" alt="Tim Harford" /></p></div> He's first book, “<a style="font-weight: bold;" href="http://timharford.com/undercovereconomist/">The Undercover Economist</a>” had a good sale which is nearly one million copies worldwide in almost 30 languages. His second book, “<a style="font-weight: bold;" href="http://timharford.com/logicoflife/">The Logic of Life</a>“, was published early in 2008 in English, and been translated<br />Tim presented the BBC television series “Trust Me, I’m an Economist” and now he presents the BBC radio series “More or Less”. He is a regular contributor to other radio and TV programs, including the Colbert Report, Marketplace, Morning Edition, Today, and Newsnight. he has been published by the leading magazines and newspapers on both sides of the Atlantic, also including Forbes, Wired, New York Magazine, the Guardian, the London Times, the Washington Post and the New York Times. He won the 2006 Bastiat Prize for economic journalism.<br />Before becoming a writer, Tim worked for Shell, the World Bank and as a tutor at Oxford University,and earned there an M.Phil(Master of Philosophy) in economics in 1998. And he lives in London with his wife and two daughters.<br /><br />He's Topics:<br /><h1><span class="h1_subhead">Explaining the huge rise in teen oral sex.</span></h1>Here Tim states that teenagers having sex causes huge problems. Every year Percentage of people having sex is increased. Commonly it's about 75 or 80% of teenage and adults are having sex. Tim says that oral sex is much more safer than penetrative sex. But still if this keeps on diseases like HIV are transferred among teenagers. Many teenagers are catching those illnesses and spreading it worldwide. But products like condoms are made to prevent from those diseases and having birth. Still it's not enough because diseases still can pass it's not a 100% protection.<br />He discussed and made explanation for this. For example Teenagers would have less risky sex if the cost of risky sex went up. If Legislation's were tightened for example a teenager can't abort at least without having 1 parent to sign. This would decreases the amount of sex, teenagers will be more scared to have sex.<br /><br /><span style="font-size:130%;"><br /><br />Article by </span><span style="font-size:130%;"><span style="font-weight: bold;"></span>by Tim Harford</span> <h1>How To Save Smarter</h1>Not very long ago Americans were terrible savers. In 2007, the average person put aside 60% of every $100 . As of February personal saving estimations were more than 4% but it's still not enough. Why is it so difficult to save money?<br /><br />Behavioral economists and researchers found three reasons why people find it so difficult to save. The first is temptation: We just can't resist spending we should spend in order to live . The second is lack of understanding: Our brains can't understand the profit's of savings. The third is optimism: We are so optimistic that everything will be ok if we don't save. <br /><br />Fortunately, researchers have found solutions to these problems. Temptation can be cured if you make saving as much fun as spending. For example we can spend money to buy a car. But instead we can just daydream and imagine that we already bought a car and save money, because we can still buy a car. We can just make plans buy savings for example we can think if we save now later we can buy more stuff, new car, Triton fees etc.<br /><br /> Or try this effective technique: Remind yourself to save whenever your paycheck comes. Set up a calender or set and alarm on your phone. <br /><br />Researchers Jonathan Zinman of Dartmouth College and Victor Stango of the University of California, Davis, have discovered another reason that we don’t save: We forget about the power of compound interest e.g $10,000 invested at a 5% interest rate will almost triple in 20 years. So more money is lost.<br /><br /><table style="margin-left: 25px;" align="right" width="160"> <tbody> <tr> <td> <div style="font-size: 10pt;" align="center"> <a href="http://www.parade.com/news/slideshows/money/6-ways-to-grow-your-nest-egg.html"> <img alt="" src="http://www.parade.com/images/-v4/news/2009/0510/default-money-in-nest.jpg" border="0" /> <strong></strong></a></div><br /></td> </tr> </tbody> </table>“Almost everyone severely underestimates how much interest they can earn on their savings,” Zinman says. And is also applied how we think about debts, millions of Americans pas 20% or higher interest rates on their credit-card balances. Those debts will rise if we don't save. We can't underestimate the debts and the usefulness of savings.<br /><br />Over the last 20 years stock prices rose strongly. As a result, those who grew up during this period became optimistic about future investments and willingly took big risks. Older investors, shaken by the poorly performing stock market of the 1970s, acted with much more caution. <br /><br />Tim says Thanks to the present financial disturbance, today’s teenagers will probably have much less trouble saving when they hit adulthood. They’ll have seen firsthand that saving is not about using your money to invest and make a killing on stocks or to own some business; it’s about putting some of your money safely aside in an uncertain world. That’s a lesson we should all start to learn. <br /><br /> <div id="kicker"><br /></div>UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-18012859917217610372009-11-22T08:54:00.000-08:002009-11-23T09:02:08.425-08:00If the government borrows a lot of money, what will this do to interest rates?<span style="font-weight: bold;">Interest rates will eventually go up because there is a massive amount of borrowing by the federal government. This is the result of the amount the government is spending - budget deficits. But gov mustn't have never had this level of spending. The government must borrow to cover all this spending. Much of the borrowing is from foreign countries such as China, India, Brazil, Japan, European countries, etc. Over time, the only way that they will loan us money is if we pay them more for the risk they are taking - which means paying them a higher interest rate. This is a major concern for the country in the long term. I hope that makes sense and helps you.<br /><br />And here is the graph: it shows aggregate demand shifting left because interest rates had mount.<br /><br /></span><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsEh-7LrYBuLkmB3E3WzSKIKLnjSPm2yyH1ioJ_nAo2XZpVcfUG2YyvNEk3IjlvFfvOH6lxE0hC0CHN1ZtLHKfSChILUaxb84QjmqLRmTnbYzj4xLE9v3czZDhVMBe5Pa1tYENqRWm5qDq/s1600/%D0%91%D0%B5%D0%B7%D1%8B%D0%BC%D1%8F%D0%BD%D0%BD%D1%8B%D0%B9.bmp"><img style="cursor: pointer; width: 373px; height: 260px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgsEh-7LrYBuLkmB3E3WzSKIKLnjSPm2yyH1ioJ_nAo2XZpVcfUG2YyvNEk3IjlvFfvOH6lxE0hC0CHN1ZtLHKfSChILUaxb84QjmqLRmTnbYzj4xLE9v3czZDhVMBe5Pa1tYENqRWm5qDq/s320/%D0%91%D0%B5%D0%B7%D1%8B%D0%BC%D1%8F%D0%BD%D0%BD%D1%8B%D0%B9.bmp" alt="" id="BLOGGER_PHOTO_ID_5407344551911696226" border="0" /></a><br /><span style="font-weight: bold;"><br /><br /><br /><br /><br />As Chris Told, Change in interest rates will have an impact on Unemployment, inflation, Exchange rates. All this macro economic stuff. And then The effect on inflation causes more problems, savings, etc. And then Wages, cost of production.<br />Crisis will occur. Entire economy will struggle causing downward growth. All this stuff could happen just because of over borrowing. I will suggest you something, " don't even borrow money from your friends, this will make successful man in the future" )<br /><br /><br /><br /><br /><br /><br /><br /><br /></span>UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com1tag:blogger.com,1999:blog-3765556460040631932.post-11738191111485391802009-11-19T08:30:00.000-08:002009-11-19T08:45:34.539-08:00Pollution<span style="font-size:130%;"><span style="font-weight: bold;">Today i'll write about the difference between the Environment and pollution of Britain according to My country Uzbekistan. </span><br /><span style="font-weight: bold;">Of course The main thing is pollution caused by cars, factory's and cigarettes(etc.) Environment and atmosphere in Uzbekistan is much more worse than in Britain Because our countries economy is too low. Government spending's are less, because they don't impose high taxes on cigarettes and on the factory's and cars. We've been in market failure since we were separated from USSR. Cigarettes are 10 times cheaper than in Britain. We should grow.. And i think we should impose 100% taxes on cigarettes and more taxes on huge factory's. But one thing is better than UK which is traffic congestion. UK has lot's of cars but we have much less. But we have massive amount of passive smokers which are destroying the atmosphere. So i thought to use fiscal policy and to tax the cigarettes so less people will buy it. Government will have more income, so they'll be able to subsidies start-ups and encourage production and consumption.</span></span>UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-39201403199562104062009-11-09T08:02:00.001-08:002009-11-09T08:25:19.388-08:00Making money from crisisToday i wanna talk about crisis. We know that crisis effects everyone accept children. Crisis occurs abruptly, it's like a wind. Wind comes and damages the tree leafs. And the tree leafs fall. The crisis is exactly the same. It comes suddenly and and a person standing in high position suddenly falls, mostly it effects banks.<br /><br />But if you are wise enough! you can make money during this crisis. But you need capital. If your and ordinary person... it'll be arduous to gain big profits. But if you have capital and your businessman or you own a business you can gain vast amount of profits. For example during crisis assets such as houses are getting cheap and some industries are ending up bankrupt. And many things are getting cheap but for a while. If you use this moment and if you buy them during the beginning of the crisis, and then you can sell it at a high price after 1 or 2 years. Or even 1 month.<br /><br />There is one more way to get rich. It's by internet. You can buy and sell shares of the public limited companies in internet. When the crisis started 1 share was 0.4 dollars. This was Russian bank called "Sberbank" but now it's shares are reaching 3 dollar per share. you see if you are wise enough you could buy 100000 of shares for 40000 dollars and now you could sell it for 300000 dollars. See how much profit is it? 260 thousand dollars of profit.<br /><br />also here is a <a href="http://www.connectionsmagazine.com/articles/7/004.html">source</a> this gives more information in details.<br /><br />Also for businesses if they are really wise they can make a lot! during crisis.UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-44161005540524882382009-11-09T07:34:00.000-08:002009-11-09T08:01:49.317-08:00As business chapter 1 summary<span style="font-weight: bold;">Enterprise</span>: process by which new businesses are formed and new products and services are brought down to the market.<br /><span style="font-weight: bold;"><br />Entrepreneurs</span>: individuals who form the business and makes it grow and takes financial risks.<br /><span style="font-weight: bold;"><br />Enterprise skill</span>: skill that allows individual or organisation to respond effectively in changing market situation( for example change in prices) understanding the risk, thinking and acting wisely.<br /><br /><span style="font-weight: bold;">Characteristics of successful entrepreneur:</span><br /><br />- passion<br />- making decisions and persistence<br />- ability to spot and take advantages of opportunities<br />- skills and expertise<br />- creativity, vision and creation<br />-willingness to take risks.<br /><br /><span style="font-weight: bold;">The importance of risks and rewards such as profit</span>:<br /><br />Failure occurs:<br />- lack of finance<br />- skills shortage<br />- complexity of regulations<br />- poor infrastructure<br /><br />Most entrepreneurs are happy to take risks if the rewards are great enough. This depends on them doing researches to minimize their failure. Outcome of taking risks is profit.<br />For example Dragonsden takes risk by investing their money for another businesses.<br />also one of the most important characteristics of an entrepreneur is to learn from their mistakes and try again.<br /><br /><span style="font-weight: bold;"> The notion of opportunity cost</span><br /><span style="font-weight: bold;"><br />Opportunity cost:</span> cost of the next best alternative foregone.<br /><br />Sometimes we need to choose and we need to make the best decisions.<br /><br /> <span style="font-weight: bold;">Motives for becoming an entrepreneur</span><br /><br />More people are interested in setting up business, because:<br /><br />- long-term low interest rates, makes easier to borrow money for star-ups.<br /><br />-change in the political climate, so the government supports start-up businesses.<br /><br />- increasing wealth, which often means that people start to look for meaning in their lives.<br /><br /><span style="font-weight: bold;"> Government support for enterprises and entrepreneurs</span><br /><br />Government support enterprises because they increase productivity, employ people, which means to reduce unemployment and many other reasons. They encourage growth, makes economy grow if they are successful. New and more dynamic business causes an increase in competitive pressure in markets, with new ideas, technology and more efficient working practices.<br /><br />Government has made measures to make it easier to start-up and run a business, and to support a growing business. It has done this by:<br /><br />- reducing the taxes, trying to establish modern tax system.<br /><br />- reducing barriers for raising finance for small businesses.<br /><br />- improving support for small and new businesses.<br /><br />- Making law to promote competitions.<br /><br />- giving financial support for voluntary and non-profit organisations that are doing excellent work.UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-31688913894319086672009-11-03T12:15:00.000-08:002009-11-03T13:10:59.868-08:00Hw economic problem<span style="font-weight: bold;">is it possible to have no scarcity?</span><br /><br />I think it's impossible to have no scarcity. Because everyone one want's something entire world want's something and needs something. We make choices how can we live without choices. For example your going to a holiday trip, you need to choose the best one which suits you. The best one which your pocket can afford. But if you don't choose and just go to a holiday trip without doing any researches, your trip would end up as a failure. Also assume you have two choices choices. First one is a 5 star hotel for 1 week and the second is 4 star hotel for 2 weeks. If you choose the first one you will have more delectation. This is called opportunity cost you will choose the best choice which satisfies you. There are expensive things, for example drugs. You can buy an expensive drug and a cheaper drug. Expensive drugs are expensive because they are made of expensive resources which are really scarce. Wants needs and choices are everywhere.<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpdG0-rHJhcY3Jg9B1d3hMYlKfVPCqndPlE6OhyAhOM2-cn8NzfdHEutCLYcWVbM6YL1P5JozvAISBsKlxV6aPVWOB6ljb2Aw05gK7pHivUo7V1iQZgaDNEkCaBrTh86O9ENwBVcNEW_Ob/s1600-h/Flow2.jpg"><img style="cursor: pointer; width: 320px; height: 234px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhpdG0-rHJhcY3Jg9B1d3hMYlKfVPCqndPlE6OhyAhOM2-cn8NzfdHEutCLYcWVbM6YL1P5JozvAISBsKlxV6aPVWOB6ljb2Aw05gK7pHivUo7V1iQZgaDNEkCaBrTh86O9ENwBVcNEW_Ob/s320/Flow2.jpg" alt="" id="BLOGGER_PHOTO_ID_5399981621345238466" border="0" /></a> This picture shows the distribution of scarce resources.<br /><br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfDGVYf3hzht3PnuIg68xtJyvt1ZUZ60Pd5J4QgAGH5eRFwtViISYoZCA7KGff_7pn9r1h504S2-Ojm_VdtdajJKM3iR2_2rAVlHxQZcXzJqucSUd24C-pyUd86Uxe5pEKa4_8q0oLkpmm/s1600-h/scarcity.jpg"><img style="cursor: pointer; width: 320px; height: 230px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfDGVYf3hzht3PnuIg68xtJyvt1ZUZ60Pd5J4QgAGH5eRFwtViISYoZCA7KGff_7pn9r1h504S2-Ojm_VdtdajJKM3iR2_2rAVlHxQZcXzJqucSUd24C-pyUd86Uxe5pEKa4_8q0oLkpmm/s320/scarcity.jpg" alt="" id="BLOGGER_PHOTO_ID_5399981615732702594" border="0" /></a> And this is the Small map which explains Problem of scarcity.<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtXE-Oyn3pPvlEY9YuI-DQCg6bY0ywD6UrJUxgh-zASUBT9GEzK7F8aWfKgxH_IpFGztVUblFjHjHe-2l6LhpAOuPUrLFv5BVPL5U7uz6yuhtF8hoSVoWRPJQBfn5Nz2EXSrqyZQJVBSd1/s1600-h/%D0%91%D0%B5%D0%B7%D1%8B%D0%BC%D1%8F%D0%BD%D0%BD%D1%8B%D0%B9.bmp"><img style="cursor: pointer; width: 320px; height: 212px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtXE-Oyn3pPvlEY9YuI-DQCg6bY0ywD6UrJUxgh-zASUBT9GEzK7F8aWfKgxH_IpFGztVUblFjHjHe-2l6LhpAOuPUrLFv5BVPL5U7uz6yuhtF8hoSVoWRPJQBfn5Nz2EXSrqyZQJVBSd1/s320/%D0%91%D0%B5%D0%B7%D1%8B%D0%BC%D1%8F%D0%BD%D0%BD%D1%8B%D0%B9.bmp" alt="" id="BLOGGER_PHOTO_ID_5399984115578804690" border="0" /></a> And drew this diagram to show what happens when resources are scarce. As you can see supply decreases and causes the demand to contract. And prices go up. For example oil it's price is always high.<br /><br /><br /><span style="font-weight: bold;">Is it likely that some wants will never be satisfied?</span><br /><br />Yes. For example governments wants to spend lot's of money on health care but they can't, they need to spend money on road constructions too.UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-46783859935281004502009-11-02T11:31:00.000-08:002009-11-02T11:34:52.635-08:00FinallyHolidays are over! Now from tomorrow on ill start posting new blogs...UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com2tag:blogger.com,1999:blog-3765556460040631932.post-65254241616883290542009-10-24T16:12:00.000-07:002009-10-24T16:27:58.558-07:00Why Don't Prices Decline During A Recession?<span style="font-weight: bold;">According to my idea, it's because the demand is more than the supply. People wanting more, and not getting that. So the decline in supply causes the prices to rise. But if prices rise, it causes people to save more. So the savings are gonna be more. This leads to the shortage of income. Prices won't decline during recession because money supply is less. If the prices will decline money supply will be more less than before, because demand is much more</span><span style="font-weight: bold;"> then the supply.</span>UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-85182876958350877462009-10-20T17:04:00.000-07:002009-10-20T18:09:20.179-07:00Economies of scale HWThe idea of economies of scale is that the more you produce, the cheaper becomes the product you have produced. And the the cost of production increases when there are massive amount of supply. Producing becomes expensive.<br /><br />And here is the graph:<br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAwrDF0UvfcKl915LII3Xbh5E_xi5Righzt72TNP0DvOAGuq3ZpEt-i4SwxHsUex6t1YWutfSN-0OjXav2TiEsV78UA8QXN86Ble71s44kPRWw7WuBA6hoqSTdhLmmGnI2xJdIOJkrgu4R/s1600-h/scale+1.bmp"><img style="cursor: pointer; width: 384px; height: 251px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAwrDF0UvfcKl915LII3Xbh5E_xi5Righzt72TNP0DvOAGuq3ZpEt-i4SwxHsUex6t1YWutfSN-0OjXav2TiEsV78UA8QXN86Ble71s44kPRWw7WuBA6hoqSTdhLmmGnI2xJdIOJkrgu4R/s320/scale+1.bmp" alt="" id="BLOGGER_PHOTO_ID_5394850077502085362" border="0" /></a><br /><br />Output is the stuff produced( e.g look at the graph, look at the level of production) and cost per unit is the cost of the stuff per unit.<br />Long run is the average cost of producing, whatever you make: shoes, drugs, food.<br />If we look at the graph there is 0 in the beginning, according to this output can be whatever even one million.<br />Also we can see the point Technical optimum, it's the point where the businesses wanna be. Internal economies of scale is when people save money, cost per units going down. Internal diseconomies of scale, it's the cost of more money that their making for each thing.<br />If you look at the arrow which goes right, it shows that, the higher the output, lower the cost per unit gets. Every extra output you make, the cost decreases little bit. And the reason for this is firms getting bigger, they are taking more people and training them to do one thing and that person gets really good at it. So you make more money you can afford better technology's, assets.<br /><br />As you can see when we pass the technical optimum cost per unit goes up. Because of overproducing. Everything will cost you more per unit. And the reason for this is when business get's really huge there are lot's of workers, lot's of staff, managers. And they all get confused, they make a mistake. They make wrong estimations and etc. This can cause overproduction.<br /><br />And here is another graph:<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-6AvK-nmtyCXH-RFp8ehh3vDtEniVqpkKYVvl8-3Tp92jImSSXqmqaiegoAecE7qAwr_g611IZN0roF6O1Y09rClHIiHc-vxm3b3NPnYA4NanQTVGxPKaCIkhVYf7whhSbcK7GrGXX1S-/s1600-h/scale+2.bmp"><img style="cursor: pointer; width: 320px; height: 212px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi-6AvK-nmtyCXH-RFp8ehh3vDtEniVqpkKYVvl8-3Tp92jImSSXqmqaiegoAecE7qAwr_g611IZN0roF6O1Y09rClHIiHc-vxm3b3NPnYA4NanQTVGxPKaCIkhVYf7whhSbcK7GrGXX1S-/s320/scale+2.bmp" alt="" id="BLOGGER_PHOTO_ID_5394850798019055666" border="0" /></a><br />The arrow shows that we can shift the curve downwards. It's because people are <span style="font-weight: bold;">Learning by doing</span>. So when we shift it down every point i that line is the cost per unit is less than before.<br />And this is done by Learning by doing, the more you do something, better your gonna be at it.<br /><br /><br />b-) For example if people grow less tomatoes, it means the output of tomato juice will be less, because cost per unit will increase. If people grow more tomatoes, economies of scale for tomato juice may reach technical optimum because the output increases. But if the business is careless it can cause overproduction and the cost per unit increases again.UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com1tag:blogger.com,1999:blog-3765556460040631932.post-53509309247598953392009-10-17T15:50:00.000-07:002009-10-17T17:37:38.084-07:00HW- The immediate problem facing the UK economy is a large output gap and decline in aggregate demand.<span style="font-size:130%;"><span style="font-weight: bold;">I did 2 hours of research to come up with this idea. But i'am a bit concerned about it.(<br /><br />I think UK needs to lower the prices for goods. But the prices are already low, but they should be lowered a bit more. I think tightening monetary and fiscal policies wont work. If we'll think of this, in a business way.... We should do more advertising, UK needs to supply their product to other countries, so the exports will be more. For example if firms and enterprises will do more advertisements(for example offering 1 supply for the price of 3, this should help). People would buy more products and goods and the cost of labor should be decreased which will make the goods and services much more cheaper.</span><br /><br /><span style="font-weight: bold;">This is not all, i think we should use Keynesians theory to accomplish the goals. Fixed investment should fall. People needs to invest less. And excess of savings causes interest rates to fall and then we will get rid of excess supply. So the savings will be equal to investment. The interest-rate fall prevents that of production and employment. People are gonna spend more. If we don't wanna cause recession again we should stabilize government spendings, cunsumption, Investment, and exports. While getting rid of execc supply we can improve the economy too. </span><br /></span>UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-48840054132917410112009-10-13T09:12:00.000-07:002009-10-13T09:39:58.651-07:00Blog topic 2:What has caused the significant productivity gap between UK and the US?In 2005, Britain’s output per hour worked rose by 0.9 per cent, according to the Conference Board. But before that, it was just falling. Because productivity was less.<br /><br />The answer to this question is Labour productivity, since labour came to power in 1997 Britain's output has fallen, because the cost of labour has increased, which means the quantity of labours are decreased. Since the cost of the labour is high, labours will spend less hours working than usual. Because their salary's will be higher. These facts will cause the productivity to decrease.<br />And here is a little graph for better understanding. I tried to draw it, unfortunately i couldn't(for some reasons :(.... I have snatched this graph from internet, but it's a nice one.<br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiupKsxAud44P8pIaSBMd21_1zi_I8bJ_4D4NK1NNXBpIExjfTsBlWaXWSWqnt9_dcx9jGw6VRmX2WLttPllsYgNDPMaDs5Sf8CRE3coKkbVFT1AUENSu_Vef32qhlb3bsmIebAvQ0h7zqM/s1600-h/ca3fd5b4-8794-11da-8762-0000779e2340.gif"><img style="cursor: pointer; width: 347px; height: 245px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiupKsxAud44P8pIaSBMd21_1zi_I8bJ_4D4NK1NNXBpIExjfTsBlWaXWSWqnt9_dcx9jGw6VRmX2WLttPllsYgNDPMaDs5Sf8CRE3coKkbVFT1AUENSu_Vef32qhlb3bsmIebAvQ0h7zqM/s320/ca3fd5b4-8794-11da-8762-0000779e2340.gif" alt="" id="BLOGGER_PHOTO_ID_5392124375779932242" border="0" /></a><br /><br /><br /><br />The difference beween US and UK's productivity is high. Because US uses computers better and by adopting more aggressive management of staff.Almost 80 % of the productivity difference between Britain and the US in this study came from the use of computers.<br /><br />With low unemployment, long hours and high numbers of people in work, Britain must improve productivity growth if the economy and living standards are to rise rapidly.<br /><br />But, Britain is in recession and there are loads of unemployed people. Britains economy is falling, it will be tough for britain to make a stability, but they have a chance to make it in 2012 Olympic games. ( only if britain doesnt explode :) )) jokeUmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com1tag:blogger.com,1999:blog-3765556460040631932.post-53286441151342673432009-10-10T14:40:00.000-07:002009-10-10T14:48:57.614-07:00What would you understand by the term “Keynesian EconomicsIt's an economic theory named after John Maynard Keynes (1883 - 1946), who was a British economist. He is well-know because of his simple explanation of the Great depression causes. The theory was mainly based on a circular flow of money. His ideas got a major amount of interventionist economic policies during the Great Depression.<br /><br />In this theory, one person's spendings goes towards anothers earnings, and the spendings of the earnings for another person, it effects, anothers earnings. This cycle continues and helps to support, normal functioning economy. The Great depression hit caused people to save up their money, for future uses. Under Keynes' theory this stopped the circular flow of money, economy stayed still.<br /><br />Ans Keynes solutions to this was to prime the pump. By saying prime the pump he argued that government spendings should be increased, either by increasing money supply or by buying things on the market.But this was not a popular solution, during the depression.<br /><br /><br />Keynesian economics warns that people musnt't save too much, or underconsumption, and not enough consumption, or spending, in the economy. It also supports large redistribution of wealth, when needed. Keynesian economics says that there is a practical reason for the massive redistribution of wealth: if the poorer sections of society are given sums of money, they will likely spend it, rather than save it, therefore pushing economic growth. Another main idea of Keynesian economics is that trends in the macroeconomic level can unbalancly effect consumer behavior at the micro-level. Keynesian economics, also called macroeconomics..<br /><br />We can see that fixed investment in plant and equipment falls from "old I" to new I(which is (a) Second(step (b), excess of saving causes interest-rate to fall, getting rid of the excess supply: so we have saving (S) equal to investment. The interest-rate fall prevents that of production and employment.<br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhmfH9g3DC4fjPbBp3a1_vqUkxQgJ_Qp0bkW0jSpR8Po-RiP6hDLMThCDK_9ckADzXuAMS6dHxAyv6IrY0u6zjDYzM4gdx3GLm3BEyPw_qHMqe95dy-jSQlOtJBObXpA1n7VXE_eBnjfFDQ/s1600-h/keynesian1.gif"><img style="cursor: pointer; width: 320px; height: 267px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhmfH9g3DC4fjPbBp3a1_vqUkxQgJ_Qp0bkW0jSpR8Po-RiP6hDLMThCDK_9ckADzXuAMS6dHxAyv6IrY0u6zjDYzM4gdx3GLm3BEyPw_qHMqe95dy-jSQlOtJBObXpA1n7VXE_eBnjfFDQ/s320/keynesian1.gif" alt="" id="BLOGGER_PHOTO_ID_5391090543361528594" border="0" /></a>UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-837309753552164032009-10-08T12:56:00.000-07:002009-10-08T13:37:11.013-07:00Formulas and some definitionsThere are some student's who started economics, a week before. These are formulas for 4 types of Elasticity and some definitions as well.<br /><br />Price elasticity of demand: Percentage change in Quantity demand / Percentage change in Price<br /><br />Income elasticigty of demand: Percentage change in Quantity demand / Percentage change in income<br /><br />Cross elasticity of demand: Percentage change in Quantity demand A / Percentage change in Price B<br /><br />Price elasticity of supply: Percentage change in Quantity Supply/ Percentage change in Price<br /><br /> <span style="font-weight: bold;"> Or simply:</span><br />PED = %Ch. Q D / % Ch. P<br /><br />YED = %Ch. Q D / % Ch.Y<br /><br />XED= %Ch. Q DA/ % Ch. PriceB<br /><br />PES= %Ch. Q S/ % Ch. Price<br /><br /><br />Price elasticity of demand -->>>> how demand responds to a change in price<br /><br />Income elasticity of demand ----->>>> how demand responds to a change in income<br /><br />Cross elasticity of demand ---->> how demand A responds to a change in price B<br /><br />Price elasticity of supply ----->> how supply responds to a change in price<br /><br />When PED= negative, prices go down and demand extends also Quantity is decreased<br /><br />When YED = negative it's an inferior good. When YED= Positive it's a normal good<br /><br />When XED = Positive it's a substitute. When it's negative it's a complement.<br />For example: when XED is +0.1 it's just a substitute or when it's -0.1 it's just a complement.<br />Also whent it's +15 it's close substitudes but if it's - 15 it's close complements.<br /><br />PES: For example the price of the good increases by 10% and Quantity supplied increases by 20% then PES= 20/10 which is 2.<br /><br /><br />Also:<br /><br />If Demand/supply curve is Horizontally lined it's called Perfectly elastic.<br /><br />If Demand/supply curve is Vertically lined it's called Perfectly inelastic.UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-60303186521020709292009-10-05T09:20:00.000-07:002009-10-05T10:17:36.326-07:00VIDEO<iframe allowfullscreen='allowfullscreen' webkitallowfullscreen='webkitallowfullscreen' mozallowfullscreen='mozallowfullscreen' width='399' height='331' src='https://www.blogger.com/video.g?token=AD6v5dzNyntUBwkSxRDBj3GY0TTYiHqtMgIyxyWokaHrRqUQKyyBpEyUl3-VzE2rsV3QDOlRRUXYaGEhReXFcNR7IA' class='b-hbp-video b-uploaded' frameborder='0'></iframe><br /><br />I was so nervous)) Also i couldn't rotate the video((UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com2tag:blogger.com,1999:blog-3765556460040631932.post-84338595964773623582009-10-02T18:11:00.000-07:002009-10-02T18:23:48.701-07:00Economics HW ( pictures)I think those pictures are related with externalities... The picture with the cars on it, shows the negative externality, because cars pollute the atmosphere, which effects entire world. But the picture without cars in it demonstrates positive externality, because there are no cars , the atmosphere is clear, it,s not polluted, this is a benefit to entire world. This decreases the Global warming effects.UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-53869344255168796532009-10-02T11:09:00.000-07:002009-10-02T13:01:14.359-07:00Summary chapter 1The word Scarcity, explains the entire <b>economics. </b> <b>Economics </b>is the study of how to allocate scarce <b>resources </b>in the most efficient way. We face <b>economics </b>all around the world. For example: you have 2 pounds, you have a choice to buy bread or to buy a bottle of coke, but you can't buy both. If you buy bottle of coke you'll be hungry, but if you'll buy a bread you'll be thirsty. This is opportunity cost- the cost of the next best alternative foregone. <p> </p><p> Choices have to made among options that are <b>available. </b>This is called <b>economic </b>problem. <b>Economic </b>problems can be studied at different levels. We can study decisions made by households, small firms. Household is a group of people whose expenditure decisions are linked. </p><p> </p><p> We have two types of <b>economics: </b> </p><p> </p><p> - Macro economics- Government <b>policies </b> </p><p> - Micro economics- <b>individual </b>decisions </p><p> </p><p> In <b>economics </b>we have 4 <b>factors </b>of production(economy produces a whole <b>range </b>of goods and services to accomplish the needs of it's population) which are: </p><p> </p><p> - Land -- it's rewarded by Rent </p><p> - Labor-- it's rewarded by Wages </p><p> - Capital-- it's rewarded by interest rates </p><p> - Enterprise-- it's rewarded by profit </p><p> </p><p> When <b>individual </b>workers, firms, <b>regions, </b>or a whole <b>economy </b>concentrates on producing goods and services and not others. This is called Specialisation. Specialisation lies at the heart of the modern <b>economy. </b>We trade, which <b>involves </b>exchange of goods and services. For example we exchange goods for other goods. Also we exchange goods or we provide services for other goods, but no money is <b>involved, </b>this is called barter. </p><p> </p><p> <b>Benefits </b>of Specialisation: </p><p> </p><p> - an increase in the output's of goods and services -->> country provides everything it needs. Raising living standards -> more output from <b>resources. </b> </p><p> - Widening the <b>range </b>of goods.( For example bananas or another types of fruit, that cannot be grown in UK) After the banana sales more bananas can be <b>purchased. </b> </p><p> - Exchange between developed and developing <b>economies. </b>Country's like china does the most of <b>exports. </b> </p><p> </p><p> Why trade? </p><p> Because trade allows countries to specialise in products which they are able to make or grow properly.(factors of production) </p><p> </p><p> Risks of Specialisations : </p><p> </p><p> - Finite <b>resources </b>-> such as oil, copper -> <b>economy </b>suffers-> unless revenues from <b>exports </b>are <b>invested </b>sagely. </p><p> - De- industrialisation -> loss of manufacturing capacity and jobs -> Many jobs are lost. </p><p> - Bad weather -> Bad crops -> reduces <b>incomes </b>-> <b>economic </b>chaos </p><p> - Taste or needs -> less <b>exports </b> </p><p> - Political side of <b>economy </b>-> like tsunami, hurricane etc. </p><p> </p><p> Division labor- it's when the production <b>process </b>is broken down into seprate jobs. </p><p> For example Producing knits, in the textile industries are more efficient if the production <b>process </b>was split up into different tasks. </p><p> </p><p> We use an <b>economic </b>model, which is production possibility curve to show how <b>resources </b>are allocated. PPC shows the maximum quantities of different combination's of output. </p><p> <br /></p>If we produce more of product A, we should sacrifice the production of pruduct B. <p> </p><p> A to B is sacrificing the product A and producing more of the product B. </p><p> </p><p> Also a trade-off is <b>involved </b>here. Trade- off means weather to give up a product for another product. </p><p><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhmpAaRHgH0JSdtVD3oKI9Ha08bBRj46GtINA1HJ8cnsFp3fKD1SeU90Nt2LqIevZ5Q7GDUio1j3ssRwa5bowqin7CbDosHD3P6Y-Ag9BMhItxJnbEsdn8wb5lDgW84QaNd9B1GmgEeEjf2/s1600-h/ppf.gif"><img style="cursor: pointer; width: 215px; height: 174px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhmpAaRHgH0JSdtVD3oKI9Ha08bBRj46GtINA1HJ8cnsFp3fKD1SeU90Nt2LqIevZ5Q7GDUio1j3ssRwa5bowqin7CbDosHD3P6Y-Ag9BMhItxJnbEsdn8wb5lDgW84QaNd9B1GmgEeEjf2/s320/ppf.gif" alt="" id="BLOGGER_PHOTO_ID_5388085320991891442" border="0" /></a><br /></p><p><br /></p><p>As you can see in point D, we are producing the same amount of <b>Consumer </b>goods as in point C. We have increase in ability to produce <b>consumer </b>goods. </p><p><a style="font-weight: bold;" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEid1WHfaPSQsNmdgOanilpuHfbX3GKltcSNbTSfNUKxcXkTo58QOvazaCVn7HMqdA6BNHOCsbnpSxgikb9kiLKxT_RQLQHNr7Fu6WxbccyOUuDoYc7QufuvOy4uyM2Ri2uTU6ptdFgEqBxl/s1600-h/question12_15.gif"><img style="cursor: pointer; width: 198px; height: 198px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEid1WHfaPSQsNmdgOanilpuHfbX3GKltcSNbTSfNUKxcXkTo58QOvazaCVn7HMqdA6BNHOCsbnpSxgikb9kiLKxT_RQLQHNr7Fu6WxbccyOUuDoYc7QufuvOy4uyM2Ri2uTU6ptdFgEqBxl/s320/question12_15.gif" alt="" id="BLOGGER_PHOTO_ID_5388087283223158018" border="0" /></a></p> <p><br /></p><p> This graph shows us the Productive <b>potential, </b>which means the maximum output that <b>economy </b>can produce. </p><p> </p><p> Change in Productive <b>potential </b>causes <b>Economic </b>growth. </p><p> lity to produce <b>consumer </b>goods. </p><p> </p> <p> </p><a style="font-weight: bold;" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEid1WHfaPSQsNmdgOanilpuHfbX3GKltcSNbTSfNUKxcXkTo58QOvazaCVn7HMqdA6BNHOCsbnpSxgikb9kiLKxT_RQLQHNr7Fu6WxbccyOUuDoYc7QufuvOy4uyM2Ri2uTU6ptdFgEqBxl/s1600-h/question12_15.gif"></a><p> </p><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCNMuQVgvbHVsItwhyphenhyphendp8tlobcnCMaftbYlvbFTTU0IKjW7xUaXS8Mp60qKklFU2WCSaA6h4b9hZ468qy-rokQxI2_aM1cQFe-AOsueqbFeYVxwGBYkhx2XBy6MIiXS1MWMDuViMydei4e/s1600-h/Economic_Growth_and_the_Production_Possibility_Curve.PNG"><img style="cursor: pointer; width: 244px; height: 176px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCNMuQVgvbHVsItwhyphenhyphendp8tlobcnCMaftbYlvbFTTU0IKjW7xUaXS8Mp60qKklFU2WCSaA6h4b9hZ468qy-rokQxI2_aM1cQFe-AOsueqbFeYVxwGBYkhx2XBy6MIiXS1MWMDuViMydei4e/s320/Economic_Growth_and_the_Production_Possibility_Curve.PNG" alt="" id="BLOGGER_PHOTO_ID_5388085315320584130" border="0" /></a><br /><br /><br />The market <b>economy </b> <p> In the market <b>economy </b><b>resources </b>are allocated by the forces of demand and supply. We have price system, it's a <b>method </b>of allocating resouces by the free movement of prices. Government has little involment in this <b>process. </b> </p><p> </p><p> For example: </p><p> </p><p> Excess supply -> fall in price -> firms less willing to pay -> Increase in price -> More firms willing to pay -> Increase in supply -> Fall in price -> firms less willing to pay and cycles around. </p><p> </p><p> We have command <b>economy </b>and mixed <b>economy </b> </p><p> </p><p> Command <b>economy </b>is when most <b>resources </b>are state owned nad allocated centrally. Government has a central <b>role </b>in all decisions that are made. Government and it's organisations are responsible for the allocation od <b>resources. </b>Government intervention. For example meat and bread, are heavily subsidised to keep it's price level low. </p><p> </p><p> Mixed economy- it's when <b>resources </b>are allocated by mixture of markets and public <b>sector </b><b>involvement. </b>Decisions <b>involve </b>an interaction between firms, <b>labor </b>and the government, mainly through the market mechanism. </p><br /><br /><br /><p> </p><p> </p><p> </p><p> </p><p> </p><p> </p><hr />UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-2969762478181868732009-10-02T10:57:00.001-07:002009-10-02T11:00:29.300-07:00This is to improve your knowledge( let's see how smart you are) comment me the answers please))Cost push and Demand pull Inflation <p> This post may help for the ones who are really behind from others..... (and for the ones who are not able to watch the video for aggregate demand) </p><p> </p><p> Inflation is caused by combination of 4 <input size="16" type="text"> . Those <input size="14" type="text"> are: </p><p> </p><p> * Supply of money goes up . </p><p> * Supply of goods goes down. </p><p> * Demand for money goes down. </p><p> * Demand for goods goes up. </p><p> </p><p> Now we'll see the <input size="20" type="text"> of cost-Push inflation and Demand-pull Inflation and we'll try understand them by using those <input size="16" type="text"> . </p><p> </p><p> <input size="20" type="text"> of Cost-Push Inflation </p><p> </p><p> If aggregate supply decreases it may cause inflation. Aggregate supply is decreased by those two main <input size="16" type="text"> : </p><p> </p><p> * An increase in wage rates </p><p> * An increase in the prices of raw materials </p><p> </p><p> The decrease in aggregate supply engage(carry on) by increasing costs, and this inflation is called cost-push inflation. </p><p> Other things remaining the same, the higher the cost of production, the smaller is the amount produced. Because of the price level, rising wage rates or rising prices of raw materials such as oil causes firms to decrease the amount of <input size="10" type="text"> employed and to shorten production. </p><p> </p><p> Aggregate supply is the the total value of the goods and services produced in a country or simply <input size="12" type="text"> 2 , "The supply of goods". The supply of goods can be shaped by <input size="14" type="text"> other than an increase in the price of inputs , so not all <input size="12" type="text"> 2 inflation is cost-push inflation. </p><p> </p><p> What caused the price of inputs to rise?. Any combinations of the four <input size="14" type="text"> could cause that, but the two most likely are <input size="12" type="text"> 2 (Raw materials such as oil have become more scarce, which means quantity is less.), or <input size="12" type="text"> 4 (The demand for raw materials and <input size="10" type="text"> have risen). This is how we understand cost push inflation and demand-pull inflation by using 4 <input size="16" type="text"> . </p><p> </p><p> And this is the diagram: it shows that the price of the supply has increased(because supply has decreased, and demand has <input size="22" type="text"> . </p><p> </p><p> <input size="20" type="text"> of Demand-Pull Inflation </p><p> </p><p> The inflation caused from an increase in aggregate demand is called demand-pull inflation. Such an inflation may rise from any single <input size="12" type="text"> that increases aggregate demand, but the main ones that increases the aggregate demand are: </p><p> </p><p> 1. Increases in the money supply(factor 1) </p><p> 2. Increases in government purchases(more goods, supply increases) </p><p> 3. Increases in the price level of the rest of the world. </p><p> </p><p> Inflation caused by an increase in aggregate demand, is inflation caused by <input size="12" type="text"> 4 ( which is an increase in the demand for goods, (which means Supply extends)). The three <input size="14" type="text"> listed above, which increases the aggregate demand will also tend to increase inflation, for example: </p><p> </p><p> 1. Increases in the money supply, <input size="12" type="text"> 1 inflation. </p><p> </p><p> 2. Increases in government <input size="20" type="text"> , The increased demand for goods by the government causes <input size="12" type="text"> 4 inflation. </p><p> </p><p> 3. Increases in the price level in the rest of the world, Suppose you are living in the UK. If the price of chocolate rises in Ireland, we should expect to see less English people buying chocolates from Irish and more Irish <input size="16" type="text"> the cheaper chocolate from UK <input size="16" type="text"> . From the UK's view the demand for chocolate has risen causing a price for chocolate to rise <input size="14" type="text"> ( 4 inflation) </p><p> Inflation in <input size="14" type="text"> </p><p> Cost-push inflation and demand-pull inflation can be explained using four inflation <input size="16" type="text"> . Cost-push inflation is inflation caused by rising prices of inputs ,that causes <input size="12" type="text"> 2 . Demand-pull inflation is <input size="12" type="text"> 4 inflation, which can have many causes. </p><p> </p><p> This is the diagram for Demand-pull inflation: Here we can see that Real National <input size="12" type="text"> has increased and the prices are going up, so the demand for goods is rising, more goods needs to produced, supply is extending. </p><p> </p><p> </p><p> </p><p> </p><p> </p><p> Now on this graph: Demand-pull inflation caused the demand for goods to <input size="16" type="text"> and supply to decrease. And the point LRAS is Full unemployment. When aggregate demand increases from AD1 to AD2 this will lead the <input size="14" type="text"> to full employment, many firms will widen their profit, they'll increases the prices, the production will be more. As employment in the <input size="14" type="text"> will rise, the demand for goods and services will be more inelastic. And this will allow firms to increase their prices(p1 to p2) </p>UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-74585540405223637072009-09-30T14:16:00.000-07:002009-09-30T15:06:37.319-07:00EF Workshop 2 Demand and Supply<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjR6WG8aC0UFTryxv8FW7UoVxVSvExZ_O_o5cKCDgCwfaUDWdyylC8XDv1CsXXWFLsazuhBz79QdU4HnZSRD-6CGH-otiw5tlY6iTjH_Syvl2vb5TpVHA_gbDkNFzL66zMHg-thb8x5D4Yw/s1600-h/graph.bmp"><img style="cursor: pointer; width: 462px; height: 309px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjR6WG8aC0UFTryxv8FW7UoVxVSvExZ_O_o5cKCDgCwfaUDWdyylC8XDv1CsXXWFLsazuhBz79QdU4HnZSRD-6CGH-otiw5tlY6iTjH_Syvl2vb5TpVHA_gbDkNFzL66zMHg-thb8x5D4Yw/s320/graph.bmp" alt="" id="BLOGGER_PHOTO_ID_5387378717736806866" border="0" /></a><br /><br /><br />I know it's not and ideal graph, but at least i tried)<br /><br />So this is our question:<br /><br /> <span style="font-weight: bold;">The market for petrol</span><br /><br />(a) A rise in the cost of refining petrol _H_<br /><br />(b) A fall in bus and train fares _B_<br /><br />(c) A fall in the price of crude oil and an increase in the price of cars _E_<br /><br />(d) A rise in tax on petrol and a reduction in tax on cars _A_<br /><br /> <span style="font-weight: bold;">Explanations</span><br />(a) Rise in the cost of refining petrol causes the supply curve to shift left, it means less supply and the prices increase. So the demand will contract( Remember the supply decreases demand contracts)<br />(b) A fall in bus and train fares, causes the demand to increase, which means various amount of people will travel by bus/train rather than cars... These effects will shift the demand curve to right causing the supply curve to extend.(demand increases supply extends)<br />(c) A fall in the price of crude oil will shift the supply curve to right, because cheaper the crude oil more of it will be supplied. An increase in the price of cars, shifts the demand curve to left, higher the prices demand decreases(if it's elastic)<br />(d) A rise in tax for petrol causes the supply curve for petrol to shift left, because, tax on petrol will raise the cost of production... Reduction in tax on cars causes people to buy more cars, which shifts the demand curve to right.<br /><br /><br />If one of my answers are wrong, comment please)UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com6tag:blogger.com,1999:blog-3765556460040631932.post-79115042639915062562009-09-30T14:04:00.000-07:002009-09-30T14:13:04.374-07:00ResearchToday i have realized that i need more knowledge, because i was really bad in the lessons, so i tried to get more knowledge by trying to answer questions from <a href="http://www.sparknotes.com/economics/micro/supplydemand/review/quiz.html">here</a> and also, i have found some useful questions <a href="http://economics.about.com/od/demand/ss/10_questions_2.htm">here</a>. But most of the questions will seem to be hard... And also, in this <a href="http://www.bized.co.uk/learn/economics/qbank/markets1.htm">website</a> there are lot's of useful questions, i think one the questions are similar to the one which Chris gave us.UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com0tag:blogger.com,1999:blog-3765556460040631932.post-19555877295396553072009-09-29T11:41:00.000-07:002009-09-29T11:51:48.736-07:00This is for EF student'sHey guys)) I have just seen the exchange rates, and the pound is getting weak according to dollar.<br />According to my opinion, this is it's limit, it won't go down anymore.... So, i think that we should change our dollars into Pounds as much as we can) Remember SPICeD, it's the time... we are exports and this is the time when Pound has been weakened... we'll get more pounds for dollar. So hurry, according to my opinion we'll not have a chance after 2-3 days, or even less, because exchange rates are unpredictable.UmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com1tag:blogger.com,1999:blog-3765556460040631932.post-49529847861375336422009-09-27T15:10:00.000-07:002009-09-27T15:50:39.681-07:00HW(continues)208-) B 217-) B<br /><br />209-) A 218-) D<br /><br />210-) C<br /><br />211-) D<br /><br />212-) D<br /><br />213-) C<br /><br />214-) A<br /><br />215-) B<br /><br />216-) BUmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com1tag:blogger.com,1999:blog-3765556460040631932.post-59540370870216276902009-09-27T14:33:00.000-07:002009-09-27T14:39:35.466-07:00Hw(continues)<span style="font-weight: bold;">2.6 Cross price and Income Elasticity of demand </span><br /><br />187-) B 198-) A <br /><br />188-) B 199 -) C <br /><br />189-) B 200-) C <br /><br />190-) A 201-) B<br /><br />191-) A 202-) B<br /><br />192-) B 203-) D<br /><br />193-) C 204-) A <br /><br />194-) B 205-) C<br /><br />195-) D 206-) B<br /><br />196-) A 207-) D<br /><br />197-) DUmidbekEFhttp://www.blogger.com/profile/04524810680251231811noreply@blogger.com1