Economics / Business

Chapter 4: Aggreagte demand and aggregate supply and their interaction

2010-01-18T23:43:00.001Z

First chapter of part 2 of the book: A study of the whole economy. The nature of that aggregate demandand aggregate supply and how they interact to affect output, unemplyment and inflation.

Aggregate demand(AD): total demand for a contry's goods and services at a given price level and in a given time period.

Calculate AD: C + I + G + (X – M)

The components of aggregate demand

C = Consumer expenditure:

Real disposable income
Wealth
Confidence and expectations
The rate of interest
Age
Distribution of income(give from the rich too the poor, bcause poor spend a higher%)
Inflation

(Saving:(stop buying things)

Real distposable income(higher income=higher savings)
The rate of intrest
Confidence and expectations about the feature
Savings schemes(contractual)
Range of financial institutions(put their money somewhere to save them)
Government policies(tax free schemes?)
Age)

I = Investment: (from companyes when:)

Changes in real distposable income(increasing → demand for goods/services increases)
Expectations, feel optimistic
Capacity utilisation: the extent to which firms are using their capital goods
Current profit levels: provide the finance to invest or contribute to firms optimism about feature.
Corporation tax: tax on a firms profit
The rate of interest
Advances in technology: unit cost would fall.
Price of capital equipment, reduction in the price of.... → more money to expand their capacity

G = Government spending:

War, terrorists etc, can increase government spending
Voters pressure on the government to spend money on health, education transport
Level of economic activity in the economy, high unemplyment → G rise its spending
Governments view on the extent of market failure and its ability to correct it

(X – M)= Net Exports

Real disposable income abroad
Real disposable income at home
The domestic price level. Value of export might be higher than imports and vise verca.
The exchange rate: price of one currency in terms of another currency
Government restictions on free trade. Tariff: A tax on imports.

The realationship between aggregate demand and the price level

AD is inversely related to the price level. A rse in the price level causes a fall, contraction, in aggregate demand and a fall in the price level results in a rise or extension, in aggregate demand.

AD is downward sloping:

The wealth effect
The rate of intrest effect
The international trade effect

Aggregate supply: AS: The total amount that producers in an economy are willing and able to supply at a given price level in a given time period.

Shifts in the AS curve

Main cause- short run: Change in the costs of production
Main cause- long run: Productive capacity: Changes in the quantitu and quality of resources.

Def:

Productivity: Output/production, of a good or service per worker per unit of a factor of production in a given time peroid.

Privatisation: Transfer of assets from the public to the privvate sector.

Macroeconomic equilibrium: A situaton where AD equals AS and real GDP is not changing.

(Real GDP:the contry's output measured in constant prices and so adjusted for inflation.

Demand pull: AD shift to the right

Cost push: AS shift to the left

The circular flow of income: Movement of spending and income throughout the economy.

Income earned by households is spendt on buying goods/services from firms. Or going to:

Leakages: (withdrawals of possible spending from the circular flow of income) Savings, imports and taxes.

Firms use on production and:

Injections: additions of extra spending into the circular flow of income: Investment, government spending and exports.

The multiplier effect: The process by which any change in a component of aggregate demand results in a greater final change in real GDP.

Changes in AD:

Effected by the output of an economy, unemplyment and inflation:

the size of the intial change
the size of the multiplier
the orginal level of economic activity.

Changes in AS:

Depend on the size of the change and the initial level of economic activity. An increase in AS occourring when the economy is at, or close to full capacity will raise the output of the economy and lower the price level. Rises mainly due to advances in technology and improved education.

Changes in AD and AS

AD grows more rapidly than the growth in productive capacity → inflation.

Overheating: The growth in AD outstripping the growth in AS, resulting in inflation.

Output gap

def: The difference between an economy's actual and potential real GDP. (when an economy is not producing at full capacity.)

Trend growth: The expected increase in potential output over time.

Chapter 5. Government economic policy objectives and indicators of national economic performance

2010-01-18T23:42:00.001Z

Key performance indicators:

Economic growth: in the short run, an increase in real GDP, and in the long run, an increase in productive capacity, that is, in maximum output that the economy can produce

Unemployment: A situation where people are out of work but are willing and able to work

Labour force: The people who are employed and unemployed, that is, those who are economically inactive

Economically inactive: People of working ago who are neither employed nor unemployed

Inflation: A sustained rise in the price level; the percentage increase in the price level over a period of time.

Hyperinflation: an inflation rate above 50 per cent.

Deflation: A sustained fall in the general price.

Balance of payment: a record of money flows coming in and going out of a country.

Distributed income: Government will redistribute, and taxing the rich and providing state benefits for the poor → Stability

Promote economic stability: fluctuations in output, employment, and inflation → Long term growth potential in the economy.

Current trends:

UK: Economic growth by combining low unemployment and stable inflation → UK's AS curve is more elastic. Can improve by:

Better transport infrastructure
Higher economic activity rate
Better education
Higher productivity
More spending on research
Development and more innovation

Inflation rates fallen and stays low:

governments monetary policy
Strong pound
Competitions → push firms to keep cost and price low
Technology
Immigration of workers

Elastic: Responsive to a change in market conditions.

Inflation rate: The percentage increase in the price level over a period of time.

Objectives of government economic policy:

Economic growth:

Sustainable economic growth: Economic growth that can continue over time and does not endanger future generations' ability to expand productive capacity.

Trend growth: The expected increase in potential output over time. It is a measure of how fast the economy can grow without generating inflation.
Employment and unemployment

Full employment: A situation where those wanting and able to work can find employment at the going wage rate
Inflation: a low and consistent rate of inflation
Balance of payment:

Current account deficit: When more money is leaving the country than entering it, as a result of sales of its exports, income and current transfers from abroad being less imports and income and current transfers going abroad.
Economic stability: Unstable → Under perform in terms of economic growth.
Income redistribution: Taxing rich people and give benefits for the poor people.

GDP and real GDP

GDP: (Gross domestic product) The total output of goods and services produced in a country.
Real GDP: The contras output measured in constant prices and so adjusted for inflation.

Nominal GDP: output measured in current prices and so not adjusted for inflation

Calculate: Difference in output from last year to this year/Last year output x 100%

Measuring economic growth:

Percentage change in real GDP(change in a countrys output)

Production and productivity:

Labour productivity: Output per worker

Difficulties in interpreting changes in Real GDP:

Rise In population → rise in output.

Informal economy: Economic activity that is not recorded or registered with the authorities in order to avoid paying tax or complying with regulations, or because the activity is illegal.

Economy of scale: The advantage of producing on large scale, in the form of lower long-run average cost.

Measuring unemployment

Unemployment rate: The percentage of the labour force who are out of work:

Calculation: Th eUnemployed x 100% / labour force

Labour force survey: a measure of unemployment based on a survey using the ILO definition of unemployment.

International labour organisation(ILO) A member organisations of the United Nations that collects statistics on labour market conditions and seeks to improve working conditions.

Claimant count: A measure of unemployment that includes those received unemployment-related benefits.

Measuring inflation:

Consumer prices index: A measure of changes in the price of a representative basket of consumer goods and services. Differs from the retail prices index (RPI) in methodology and coverage.

Calc figures into index numbers: Actual figure(of product) x 100 / Base year figure

The CPI and other measured of inflation

Retail prices index(RPI): Measure of inflation that is used for adjusting pensions and other benefits to take account of changes in inflation and frequently used in wage negotiations. Differs from the consumer prices index(CPI) in methodology and coverage.

The structure of the current account of the balance of payments

The current account: Trade of goods&services, (investment-)income and transfers of money.
The capital and financial accounts: movement of direct investment.
Net errors and omissions: info to ensure that the balance of payments does balance.

Causes of economic growth:

Increase in AD
A cut in income tax
A rise in consumer confidence
Increase in government spending or net investment

The causes of unemployment

Cyclical unemployment: Unemployment arising from a lack of aggregate demand.
Structural unemployment: unemployment caused by the dicline of certain industries and occupations due to changes in demand and supply.
Frictional unemployment: Short term unemployment occourinwhen workers are in-between jobs.

The causes of inflation:

Demand-pull inflation: increases in the price level caused by increases in AD

Cost-push inflation: Increases in the price level caused by increases in the cost of production.

The consequences of unemployment

Lost output
Lost tax revenue
Government spending on unemployment benefits
Pressure on other forms of government spending
Cost to the unemployed
Hysteresis(unemployed causing unemployment)

Long-term unemployment: Unemployment lasting for more than a year.

The benefits of unemployment

Give people time to a more rewarding job
Easier for firms that wants to expand
Reduce demand-pull and cost-push inflation

The consequences of inflation

Fall in the value of money
Menu costs: Cost of changing prices due to inflation
Shoeleather costs: Costs in term of the extra time and effort involved in reducing money holdings
Administrative costs
Inflationary noise: The distortion of price signals caused by inflation.
Random redistribution of income: Real intrest rate: nominal intrest rate – inflation rate.
Fiscal drag: Peoples income being dragged into higher tax bands as a result of tax brackets not being adjusted in line with inflation
Uncertainty
Inflation causing inflation
Loss of international competitiveness

The benefits of inflation:

Encourage firms to increase output
Psychologically, we feel better when out income increase even if this is mating with the prices.
Market operate more efficiently and reduce unemployment

Deflation:

Country's competitiveness will increase
Can lead to higher unemployment

The benefits of economic growth:

Def:

International Monetary Fund(IMF) An international organisation that helps co-ordinate the international monetary system.

Word Trade Organisation (WTO): An international organisation that promotes free international trade and rules on international trade disputes.

Determination of exchange rates:

Def:
Exchange rate: The price of one currency in terms of another currency or currencies.

Monetary Policy Committee (MPC) A committee of the Bank of England with responsibility for setting the interest rate in order to meet the governments inflation target.

Chapter 6: The application of macroeconomic policy instruments and the international economy

2010-01-18T23:39:00.002Z

The government use three main economic policies:

Fiscal policy: the taxation and spending decisions of a governments
Monetary policy: central bank, and/or government decisions on the rate of interest, the money supply and the exchange rate.
Supply-side policies: policies designed to increase AS by improving the efficiency of labour and product markets.

To influence economic activity and to achieve their macroeconomic policy objectives.

Fiscal policy(supply side policies)

The government affecting AD.

Eg:Rise AD by increasing its own spending/reducing taxes= Reflationary: :of policy measures designed to increase aggregate demand. Deflationary(det motsatte) of policy measures designed to reduce aggregate demand) & Multiply effect.

The nature of fiscal policy

government try to stabilise and make AD match AS, this is called “acting counter-cyclically. The G is seeking this, by offsetting changes in private sector spending by:

Discretionary fiscal policy: deliberate changes in government spending and taxation designed to influence AD
Automatic stabilisers: forms of government spending and taxation that change automatically to offset fluctuations in economic activity

Economic cycle: the tendency for economic activity to fluctuate outside its trend growth rate, moving from a high level of economic activity(boom) to negative economic growth(recession)

Types of taxes

Progressive tax: a tax that takes a higher percentage from the income of the rich
Regressive tax: a tax that takes a greater percentage from the income of the poor.

Government spending: (divided into:)

capital expenditure(roads, hospitals, schools etc.)
current spending(public services)
transfer payments(money transferred from taxpayers to recipients of benefits)
debt interest payments (to the holders of government debt)

The budget

Shows the relationship between government spending and tax revenue.

Def: Recession: A fall in real GDP over a period of six months or more.

Monetary policy: (supply side policies)

The rate of interest, the money supply and the exchange rate.

Eg: A rise in interest rate → decrease AD, by reducing consumption investment and export – imports.

Changes in the money supply and interest rates are inversely related. A rise in money supply, reduces the interest rate.

The monetary policy committee(MPC) of the bank of England sets rates in the UK.

Trying to increase AS

Supply-side policies

Policies seek to increase or decrease AD depending on the level of economic activity.

Examples:

Education and training
Government assistance to new firms
Reduction in direct taxes
National minimum wage(NMW)
Reduction in unemployment benefit
Reduction in other benefits
Reduction in trade union power
Privatisation
Deregulation

Policies to reduce unemployment

Demand-side policies

Supply-side policies

Policies to promote economy growth

Short run:

Lower rate of interest is likely to stimulate consumption and investment
Higher investment will increase AS
Increase government spending

Long run:

Quality and or quantity of resources
Human capital: Education, training and experience that a worker, or a group of workers, possesses.

Stable growth

Actual growth to match trend growth and for that trend growth to rise over time.

Policies to improve the balance of payments

Short run:(concentrated on the demand side)

Government try to raise export revenue/reduce import expenditure to correct a current account deficit: Causing a fall in the exchange rate, reducing demand for all products whatever their source and specifically reducing demand for imports.

Exchange rate adjustments: Exchange rate to be on a current level with other country's.
Deflationary demand management: Reduce government spending, higher taxes, etc.
Import restrictions: Reduce expenditure on imports by composing import restrictions including:
Tariffs: A tax on imports

Quota: A limit on imports

Long run(concentrated on the supply side):

Lack of quantity competitiveness, low labour productivity or high inflation, then reducing the value of the currency deflationary demand-side policy instruments and import restrictions

Current account surplus: when more money is leaving the country than entering it, as a result of its exports, income and current transfers from abroad being less than imports,income and current transfers going abroad.

Effectiveness of ficial policy: Drawbacks:

government spending and tax rates take time to have an effect on the economy, it can also take time to recognise the need for a change in policy and to gether the information on which to base the change.
Time lag between introducing a fiscal policy instrument and that instrument having an impact on the economy. Eg: Income tax in changes , households take some time to adjust their spending.
Forms of government spending are inflexible. Difficult to cut spending on health care and pensions.

The effectiveness of monetary policy:

The effects of monetary policy tend to be more concentrated on certain groups than do changes in income tax for example.
Limit with using interest rate changes is that when the interest rate falls to very low levels, a further cut is likely to be ineffective in stimulating activity.
?: Extend AD → change in response to interest rate changes.

The effectiveness of supply-side policies

Increasing the productive potential of an economy on its own, will not be sufficient in raising economic performance if there is a lack of AD.
Eg: Spending on education → long time to have an effect

Possible conflicts between policy objectives:

Economic growth and low unemployment may benefit from expansionary demand-side policy measures, but this will make it more difficult for a government to achieve low inflation and satisfactory balance of payments position.

Interest rate

Advantages that may be gained from international trade

Enables the country to specialise as the products it does not produce it can import
Lower prices and higher quality that results from the higher level of competition that arises from countries trading internationally
Enjoy a greater variety of products, including a few not made in the country.

Methods of protection:
Def: Protectionism: The protection of domestic industries from foreign competition.

Tariffs: a tax on import
Quotas: a limit on imports
Voluntary export restraint(REV) A limit placed on imports from a country with the agreement of that country's government.
Foreign exchange restrictions: Seek to reduce imports by limiting the amount of foreign exchange made available to those wishing to buy imported foods and services or invest , travel abroad
Embargoes: Ban on the export or import of a product and/or a ban on trade with a particular country.
Redtape: Time-delaying customs procedures may be used to discourage imports
Etc.....

Aggregate Demand & Supply

2009-11-25T18:41:00.003Z

Aggregate Demand(AD): The total demand for a contry's goods and services at a given price level and in a given time period.

Aggregate Supply(AS): The total amount that producers in an economy are willing and able to supply at a given price level in a given time period.

Please watch the video: http://www.youtube.com/watch?v=RemyT7upOMI

Judging the effects of government intervention

2009-11-24T21:36:00.000Z

Efficiency of a policy:

What they are able/can do to streamline...
E.g. does it improve allocative, productive and dynamic efficiency

Effectiveness of a policy:

Which government policy is most likely to meet a specific economic or social objective?
Which policies are likely to have an impact in the short term when a quick response from consumers and producers is desired, and which policies are likely to prove most cost-effective in the longer term?

Equity effects of intervention:

Try to make the distribution of income more equal?

E.g. Does one group in the society gain more than other groups?

Sustainability of a policy:

Which sources of energy we choose to rely on in to future years

Market failure and government intervention

2009-11-19T19:38:00.003Z

Definitions from chapter three...

Market Failure: Where the free market mechanism fails to achieve economic efficiency.

Productive Efficiency: where production takes place using the least amount of scarce resources.

Economic Efficiency: where both allocative and productive efficiency are achieved.

Inefficiency: Any situation where economic efficiency is not achieved.

Free Market Mechanism: The system by which the market forces of demand and supply determine prices and the decisions made by consumers and firms.

Information Failure: A lack of information resulting in condumers and producers making decisions that do not maximise welfare.

Asymmetric Information: information not equally shared between two parties

Externality: An effect whereby those not directly involved in taking a decision are affected by the action of others.

Third Party: Those not directly involved in making a decision.

Private Cost: The costs incurred by those taking a perticular action.

Private Benefits: The benefits directly accuring to those taking a particular action.

External Cost: The cost that the consequence of externalities to third parties.

External Benefits: The benefits that accure as a consequence of externalities to third parties.

Social Costs: The total costs of a particular action.

Social Benefits: The total benefits of a particular action.

Negative Externality: This exist where te social cost of an activity is greater than the private cost.

Positive Externality: This exists where the social benefit of an activity exceeds the private benefit.

Merit Goods: These have more private benefits than their consumers actually realise.

Demerit Goods: Their consumption is more harmful than is actually realised.

Public Goods: Goods that are collectively consumed and have the characteristics of non-excludability and non rivalry.

Non-excludability: Situation existing where invidual consumers cannot be excluded from consumption.

Free-riders: Someone who directly benefits from the consumption of a public good, but who does not contribute towards its provision.

Non-rivalry: Situation existing where consumption by one person does not affect the consumption of all others.

Quasi-public goods: Goods having some but not all of the characteristics of a public good.

Direct Tax: One that taxes the income of people and firms that cannot be avoided.

Indirect tax: A tax levied on goods and services.

Polluter Pays Principle: Any measure, such as a green tax, whereby the polluter pays explicitly for the pollution causes.

Subsidy: A payment, usally from government, to encourage production or consumption.

Tradable Permit: A permit that allows the owner to emit a certain amout of pollution and that, if unused or only partically used, can be solt to another polluter.

Norwegian Economy

2009-11-18T23:20:00.002Z

The Norwegian economy and the Norwegian economic policy is good today, because the country has a good fiscal-(oil and taxes) and monetary policy course.

Anyway the government has been smart in their use of the oil money, by saving it for the future, and for any problems that might come up, demand of oil is decreasing etc.

We have managed to keep growth rates low, and with an economic growth and low unemployment, we have helt the Norwegian economy stable for many years.

The only thing the Norwegian government should do something with is the extent of “sick leave”(?) and disability benefits; let older people stay in work etc.

Market Failure

2009-11-17T18:06:00.005Z

PIC PIE

P - ublic goods(goods collectively consumed and have the characteristics of non-excludability and non-rivalry.
I - mmobiility (of production)(extreme limits of the activity)
C - (lack of) ompetition(gives the big firns on the market monopoly, and keeps small businesses afloat)

P - owerty(poor contry, having fewer resources or less income than others in a society, country, or in relation to the global average.)
I - nformation failure(a lack of information resulting in consumers and produvers making decisions that do not maximise welfare)
E - xternalities (effect whereby those not directly involved in taking a decision are affected by the actions of others)

and with this I proclaim my DAILY BLOG for open again ... Until Christmas holiday...

Externalities

2009-10-15T17:12:00.007+01:00

Definition: An effect whereby those not directly involved in taking a decision are affected by actions of others

When you are the third part, you're just effected by the world around you, and not involved in the decision.

Ex: Teacher learns a student to be very good in philosophy, that gets other people the student associate with, to think in a more philosophic way. Ergo: you are affected by what the student learnt from the teacher.

Costs and benefits

Private- costs and benefits: Individuals directly involved in the decision to take a particular action, eighter as producers or consumers. The cost is incurred by when the individuals are taking a action. The benefits coming to the individuals who takes a particular action. Ex: A good/service payd by an individual.
External- costs and benefits: consequences that falls on the third part. The costs are the consequences that happen to the third part. The benefits are the externalities to the third part. Ex: Noise problems.
Social- cost and benefits: The total costs and benefits of a particular action.

Negative externalities

Definition: This exist where the social cost of an activity is reater than the private cost.

Examples:

Illegal dumping of waste: The private cost to dumping is minimal. The external cost has to be covered by those such as local councils, responsible for maintaining the environment.
Drinking: The private cost is the cost of what you drink and how sick you get. The external cost is the police who have to stand guard for you, and the the companyes which is cleaning the streets.

The problem with positive externalities is that there is under-production of Q and Q1, with too few scarce resources are being used. Therefore the market has hailed.

Positive externalities

Definition: This exist where the social benefit of an activity exceeds the private benefit.

Examples:

Education and training: The private benefits is that you get improved skills, and get a better payd and more intressting job. The external benefits are that you get better qualified emplyees for firms, and in a long term, cmpetitiveness for the economy for the country.
Crossrail: The private benefit is that everything is going to go faster. The external benefit is that the project will reduce road traffic, reducing overcrowding.

The problem with negative externalities is that there is overproduction of Q and Q1, and the price paid is lower than it should be. Therefore, the market has failed because of allocative inefficiency.

Elasticity

2009-10-08T22:29:00.002+01:00

Every time Chris say “Elasticity” your answer should be “Responsiveness”

The definition you read in your book says that elasticity is the extent to which buyers and sellers respond to a change in market conditions.

When the price is elastic, the percent change in the demand is sensitive to a change in price, when this allows to that the consumers choose a alternative(substitute) product.

Inelasticity:

The price is inelastic when the percentage change in the quantity demanded is insensitive to a change in price.

Example: Oil

The formulas:

Price elasticity of demand(PED) is the responsiveness of the demand to a change in the price of the product.

%change quantity demanded / %change in price

If PED = 0 then demand is perfectly inelastic.
If PED is between 0 and 1, then demand is inelastic.
If PED = 1, then demand is unit elastic
If PED > 1, then demand is elastic

Price elasticity of supply(PES) is the responsiveness of the quantity supplied to change in the price of the product:

%change quantity supplied / %change in price

When PES is > 1, then supply is price elastic
When -1 PES is <1,>
When PES = 0, supply is perfectly inelastic
When PES = infinity, supply is perfectly elastic following a change in demand

Cross elasticity of demand(XED) is the responsiveness of demand for one product in relation to change in the price of another product:

%change in quantity demanded of a product A / %change in price of a product B

When XED is >0, gives substitutes goods
When XED is <0,>

Income elasticity of demand(YED) is the responsiveness of demand to change in income:

%change in quantity demanded / %change in income

Normal goods: >0, positive
Inferior good: <0,>

Sources:

OCR Economics AS
http://www.tutor2u.net/economics/revision-notes/index.html

Supply & Demand

2009-10-07T20:46:00.010+01:00

Supply and demand is a basic economic consept(which I should be able to know what is, and how to put it in too a diagram...) and an important part of the market economy(=economic system whereby resources are allocated through the market forces of demand and supply.)

The prices of goods and services are influenced by how much the producers are willing and able to produce, and how much the costumers are willing and able to pay.

Definition of demand: the quantity of a product that consumers are able and willing to purchase at various prices over a period time.

The law of demand says that the price will decrease/increase along with demand.

The national demand, costumers wants which refers to the taste, preferences, etc, and effective demand, the ability they have to pay, make the curve of demand.

Demand curve is based on data, calld demand schedule. These data the companyes gathering over time, for exby checking how much of a product they sold to a particular price, asking the costumers what they think about the price, if they could pay more or less, and why, etc.

The price of a product falls we will buy more, which results in an increase in the quantity demand. On the other hand, if the price of a product goes up, quantity of demand dalls, and the only cause is the change in the price of the product. These changes are referred to as movement along the demand curve, which means that a change in a non-price factor leads to an increase factor leads to an increase or decrease in demand for a product.

Consumers supply is how much more extra the costumers are willing to pay over the market price of a product. Higher price → less consumers.

The change in te curve I sbecause of consumers income, the prices of other products and tastes and fashion.

Definition of supply: the quantity of a product that producers are willing and able to provide at different market prices over a period of time.

The law of supply tells us that for a higher quantity the producer will produce more, because they are willing to afford more to a higher price-> revenue increases.

Supply in the market is decided by the producers: to satisfy the consumers, and to make profit.

The therm can be defined as the quantity of a product a producer is willing and able to produce at different market prices.

The factors of production(land, labor, capital, entrepreneurship) has to be used thoughtfully. These, so the company get maximum profit.

For example: a firm produce mobile phones, and they need: emplying skilled labour, producting at a suitable location, the business skills and contact to survive, and the assembly of components and parts.

The supply curve, is the realationship between price and the quantity of a product that is supplied.

An example for how the curve is, “When the price of a product/service increases, the quantity supplied increases.” These is caused by that when the company got more money from the production, they are able to produce more.

Supply schedule, data set which show how much of a product is supplied over a range of prices.

Past records may help the firms, but in the end it's up to you, as a consumer.

Producer surplus is the willingness a firm have to produce for selling products/services under the market price.

The curve changes because of the size and nature of an industry, and government policies and changes in the cost of the production etc.

Price is important for suppliers and costumers. “The price of any product is determined by demand and supply” this is called equilibrium.

Substitutes(competing goods) and compliments(joint demand)

The demand of a substitude goods depends on the price. If a good, A, costs more than another good, good B, of this type, the costumers will choose to buy the cheapest one, B. Which means that B will experience a increase in demand.

The demand of compliment goods, depends on the price of them both, because they belong toether. Ex: Bread and butter, steal and train etc.

So if the price for, for example, steal goes up and the demand will decrease, there will be more expensive to build trains.

Production of Petroleum - Norway

2009-09-30T11:34:00.005+01:00

Mood: Oil production is decreases, gas production increases

Consequences: Oil and gas activities affect the environment

- Use of fossil fuels leads to local, regional and global pollution problems.

Driving forces: energy puts a lot of pressure on the environment

Effects: Major emissions to the air and sea

Measures: National regulation and international cooperation

Source: Oljedirektoratet of Norway, Olje- og energidepartementet 2009
www.miljostatus.no

Chapter one:

2009-09-29T07:44:00.004+01:00

The Reasons for individuals, organisations and societies having to make choices

Economics problems is how to allocate scarce resources among alternative uses.

Take a choice about what you are going to spend money on.

For ex: Decisions firms have to take about what they should produce and how they could do this in the most efficient way, in contrast to their budget.

Different factors of production, which is the resource inputs that are available in an economy for the production of goods and services, as economic resources: land, labour, factor, entrepreneurship.

Land: Natural resources available, from the earth, and fossil fuels, like oil and cool.
Labour: Human resources available in any economy. Quantity and quality are key considerations.
Capital: Physical resource covering anything that can be regarded as a man-made aid of production. A combination by land and labour to produce things and services, everything you can built.
Entrepreneurship: the willingness of an entrepreneur to take risks and organise production. Entrepreneurs(individuals who have an idea, developing by setting up a new business and encourage it to grow), starting up entreprices(a business, the process by which new businesses are formed)

Specialisation used to address the problem of scarcity is done by individuals workers, regions, firms, or economies. They are only concentrated on doing especially tasks, producing some goods or services.
Exchange(:the process by which goods and services are traded) of goods or services, where you give something and get something of an equivalent value back, like in the olden days...

Market in allocating scarce resources = a market with insufficient resources to meet all want..

Opportunity cost, the cost of the next best alternative, which is forgone when a choice is made.

Ex: Dragon's Den is a television program, where The Dragons (investors) chose if they want to invest in the idea the participants are coming up with. If they investing in it, they lose the opportunity to invest in something else, and if their not investing the participants will maybe get another investor and might succeed on the market. Then the first investor who said no to invest, lost that opportunity to earn money and be fame.

Production possibility curves: this shows the maximum quantities of different combinations of output(=the finished products resulting for the transformation process) of two products, given current resources and the state of tecnology.

Ex:

Opportunity cost:

Take a look at the diagram in the picture above. If you choose to work more with maths, than economics, you use more time on maths, and less on economics → better grades in maths than economics. Visa Versa.

Transport...

2009-09-27T00:41:00.003+01:00

Cargo companies often uses ships to transport their goods to foreign countries across the globe, but what is the cheapest and most efficient way to transport their merchandise. Let's talk about the benefits and the costs of using the largest ships for transport.

Benefits:

The pollution per unit carried will decrease, since the larger ships are able to transport a larger quantity of cargo per transport. Consumer prices will be decreased; transport costs will be lowered by the usage of larger ships. Recording to the case study a larger ship is only in the need of 13 crewmembers per ship, therefore labour costs will be decrease, also fuel costs will be decreased due to the low number of ships needed.

Costs:

Huge transport ships cost allot to make, this isn’t really a big issue since the price of building allot of small ships will most certainly match the price of the larger ships. The big issue on the other hand is if the cargo companies want to save money on the large ships they need to fill the full capacity of the ships must be filled by every transport.

Revive the export economy

2009-09-26T23:19:00.001+01:00

Paul Krugman: Nobel Prize-winning economist: speaks about economical changes in Brittans manufactoring processes.

Krugman says “Gordon Brown was selling the economic successes of Britain in the past 15 years on false pretences,”

He's saying that Britain needs to go back to manufactured goods.

Then he offers some ideas of how this could happen, and suggests the British government follows in the footsteps of Silicon Valley.

Krugman then talks about new innovation hotspots(with new idea, which can give the owner(the company) much money) and the importants that the government must catch them early and correctly incubate them so they don't fizzle.

Where Im coming from..

2009-09-26T22:39:00.002+01:00

The difference from the Norwegian to the UK school system is huge. Being here in the UK for a month, I all ready think that everything is better here, (maybe because I'm starving for education(?)) with great teachers and school system.

Norwegians are confident that you have to fend yourselves, as an individual. You have to prove that you are growing up now, when you are a teenager and can, by yourselves, work with the school without the help and almost no ones to following you up. The school are expecting results from you, and feel they can relax because they already have done their exams. So now it's your turn, and you are alone.

The main problem, I believe, is among the teachers in the Norwegian school. Which has led to a fatigue syndrome, which has affected most of the people who have anything to do with the school.
The problem comes from lack of funding and focus, which threatens the quality.
Today we are on the lower part of the list of the knowledge level in school, in the Europe.

The reason we have so many strange things in the profession is probably because the last 20 years have been easy to get into the training program.

A bi-factor, although I think these has a lot to say, is that the focus of further education is small, just a little talk about college and future, do not make the motivation for students.

Coming from secondary school, students usually falls one grade down in all subjects. Ending up dropping up in dropping out of high school.

I do not know the English school system very well yet, but I have been here for a month or so, now, and I feel that there is a lot better, than the Norwegian system.

The level of teaching staff is significantly higher, than in my country. All the teachers in my school, here in UK are good, I think. They seems like people who are very happy in their jobs, because they want to teach the students to give them the knowledge to our life.
Here in england, I think that being a teacher is a more respectable, better paid and most important of all, have more knowledge and better education.

The follow-up from school, makes you feel like someone are there for you, in addition to family, who want to help you as a student and a person.

They do this by making a tight, personal relationships to their students, with small classes and teachers who take the job more seriously, working in their spare time ass well (meaning that we can contact them and always get help).
Teachers expect you to work more here in the UK than in Norway, but in return they are there for you, like always. Motivation is a key word here. Students who work more get more challenging, which makes smart students do not feel useless and bored in lessons, in different to the Norwegian school.
Subjects realized and practices, so they do not seem unreal and useless for us.
The future is not too far away, and we begin to plan now, in Unlike in Norway, with UCAS. This is the hour in which we get an introduction to the universities, subjects, etc.

We are still children and need someone to follow-up, because we, at least I know that I don't know yet, not already know what to do in our lives, and what to focus on.

Throughout my life have I been told that education is important, and always thought that I should walk in parents' footsteps.
I started in secondary school and became more and more tired of school and homework, teachers and further education.
I just wanted to travel around the world and working as a bartender, and create art on the side.

I used to think that starting up your own business/company is almost impossible, especially for girls, (do not know why, but just have that feeling) and I have never wanted to work under someone. So, I felt that I didn't want any further education. This is probably from to little knowledge.

I have never done so much at the school before, and homework has been like hell to me.

Now, here at school, my teachers, has gotten me to focus again. Unlike in the Norwegian school where teachers just gave up, if you didn't show that much interest.

Therefore, I am incredibly glad that I have come here, to the EF, Oxford. I have received education and training on a whole new ground. Although it's hard to do homework, since I'm not used to it, I just feel like a bad result of the Norwegian education system. I like now for the first time in many years to sit in in the lessons.
In recent years I have had next to none motivation for university, but now I'm starting to get an idea of maybe doing it.(There is light!) This is because of teachers, whom are incredibly clever, enthusiastic and with the desire each day.

Womens...

2009-09-25T00:27:00.005+01:00

Different cultures have a split views on how to treat women...(International Academy-> people from all over the world...)
For example:
Zimbabwe: Women have no right for inheritance.
Saudi-Arabia: Womens are not aloud to go outdoor, without being fully covered and accompanied by a male relative.
Nigeria: Women are stoned to death for adultery.
Pakistan: Women are killed when their behavior can draw the family's honor in doubt.

In Norway, my home contry, around 1000 woman who live at a secret address for fear of being seriously injured or killed by male family members. About 100 of them live in so-called code 6, which mean that their identity is completely deleted from all records.

«As a woman I can lead the worlds biggest organization for human rights, but I do not have inheritance after my father in Bangladesh.» And with these words, Amnesty International general secretary, in London in 2002, reflecting the opportunities and constraints for womens in the 21. century.

«Human are born free, and with the same dignity and rights.» says UN's declaration.
However you'll never find a country in the whole world, where theres no violation on the rights for humans, because of their gender.

The relationship between gender, discrimination and violations of social, cultural, economic, political and civil rights is unambiguous, overwhelming and universal.
For example, womans are working consistently more than the men are. Therefor womens servant less than men, because their work is undervalued.

In 2003, in Norway, where the equality struggle reached a very long, men earn 70% more than women, a clear indication that it's still a long way to go, to get the equal pay to be reality.
In the politician and economic power forums, woman are underrepresented.

A study from the World Bank tells us that constitutes violence against womens, between 15 to 44 year. Womens, not me ofcours because(say something), lives in a global health threat on par with HIV infection and cancer.

End Britan's Oil Addiction

2009-09-23T13:39:00.003+01:00

Shai Agassi: Alternative energy pioneer.

The Israeli former software entrepreneur, Shai Agassi, left his job in German software giant SAP in 2007. Oil dependency is the root cause of conflicts in the Middle East.. «If you can run one country without oil, you can run the whole world without oil.. If you can do it with car technologies, it could happen in15 years»
Therefore he started up Better Place. And with more than £120 million in venture capital, he wants to applies the business model of phones, in to cars, where the costumer buy or leases an electric vehicle, firm a partner car company, and then they can pay per-mile, for battery usage.

Gordon Brown said that electric cars has not matched by a commitment to the infrastructure...
«Take the Millennium Dome, Imagine somebody said to you: 'We're going to spend £800 millions on the off-chance that we'll get the entire country going without oil – oh, and £650 millions will go into increase green jobs tomorrow morning. Would you say it's worth a try?»

Shai Agassi only say this is talk about white elephants, but I do believe in this.
We have about half the oil again, and we continue in this pace it will soon be finished, so we have to find a new possible type of doing things.
The second is that this will be very good for stopping global warming.

Fanny's Guide to Writing a Good Blog

2009-09-22T16:45:00.006+01:00

Presentation

Make sure the presentation of the blog is attractive. This is to encourage people to read it – and, more importantly – to comment.

Presentation can be improved by the overall impact of the design. This requires careful choice of colours, plus the use of blog lists, link lists and labels.

Example – 1

Colour co-ordination poor. No archive. No labels. Post consists entirely of a photo.

Example – 2

Clear and easy to read. Good use of space.

The post itself should also be attractive to the eye. This can be achieved through the careful use of colour, videos, cartoons, photographs etc. Nothing is more boring than just a load of text!

Example:

Some attempt can be made to personalise the blog.

And another…

The post itself should be spell-checked and grammar-checked.

Sentences such as:

“Dummy copies of a thinner Observer, has been mad, and all the «extra» stuff, like music, sport etc. are at risk.”

are just careless. Mad?

One of the purposes of blog-writing is to improve your English. Thus posts should always also be checked with Peter. This type of post:

“In relation to how its like to have an internet site, where you even could make some money on having. It will be more more revenue/profit and less expenditure,

On the other hand, removing this employment, which would be a shame especially in this period we are now with financial crisis, where we need to build the world again and go all the work. “

Should, later, be corrected.

It is not enough to copy and paste. The purpose is to interact with what you read and make the resulting post your own words, your own comments. Equally we are to learn from other posts, so technical terms should be explained.

Example:

“Football

The financial crisis has also(of cours) had influenced the football market and the clubs... The banks won't give overdraft to the footballclubs and the sponsors are going out, the tickets have been fallin with 5% in 60% of the UK footballclubs. Therefore all the income resourses have been reduced, and the market is unstable.“

This is full of spelling mistakes!

Here is how it could have been expended:

Football

The financial crisis has also(of cours) had influenced the football market and the clubs...

Explain how?

What is the financial crisis?

The banks won't give overdraft to the footballclubs and the sponsors are going out, the tickets have been fallin with 5% in 60% of the UK footballclubs.

So, giving examples, what have football clubs done?

Therefore all the income resourses have been reduced, and the market is unstable.

What is a market? What are the risks of the market being unstable?

Guardian axes 100 more editorial staff

2009-09-20T17:14:00.002+01:00

Guardian axes 100 more editorial staff

2009-09-20T16:59:00.002+01:00

Guardian Media Group (GMG=a company of the United Kingdom owning various mass media operations) have decided to shut down The Observer(a news paper) so they are now cutting down sharply on their staff, and still looking for more ways to cut down the costs.

Redundancy Scheme, have done that 82 poster has gone from the commercial side of the business.

Dummy copies of a thinner Observer, has been mad, and all the «extra» stuff, like music, sport etc. are at risk.

Guardian New & Media (GNM=is the core division of GMG) had £36.8m operating loss last year. Although, Carolyn McCall, the group chief executive says that: “GNM is looking to the future and making sure it’s in good shape.”

The debt-laden Independent is seeking another extension of its standstill deal with bondholders, which expires on Friday. If the deal fails, the group may have an emergency rights issue.

A deal with the bondholders, which expires on Friday, is still standing, which means that if they don't get they as to do anything, as they probably wouldn't the deal fails, and the group may have an emergency right issue.

Japan upbeat on economic recovery

2009-09-20T16:19:00.001+01:00

The Bank of Japan(BOJ) assessment of the economy of Japan, is that they need some emergency support measures."What we do with these special measures should be decided in line with the degree of improvements in corporate finance and market conditions," said Mr Yamaguchi.
BOJ has given money to the economy to help stimulate demand. They said that doing this for to long could hinder an «autonomous recovery» (=an economy we are even able to manage and recover from) but, now this Thursday, the bank said that there are signs of improvement in the economy, entering a positive cycle, as the governor of the BOJ said. Which implies that the banks don't have to pump cash into the economy, by buying up company debt f ex.
Thursday set BOJ rate of 0.1%. A stronger yen (currency) to support the Japanese economy in the long term, although we know that this makes exports more expensive.
The yen is up 6.7% against the dollar since June, but earlier this week, said Japan's incoming finance minister, that he opposed intervention in the foreign exchange market.
Mr Yamaguchi says that we have to decide these special measure whit the degree of improvement
in corprate finance and market conditions, and now we have to keep our eyes open, so we know what we are doing, so the financial crisis will continye for some time.
The worlds second largest economy, are on their way up again, after a hard summer. The export are running faster, rised with 2,9%
The Bank of Japan has, as I said, choosen to keep the rents on 0,5% to hold the yen down. I think that is because they want to stimule the consumption and investment.
Althought the value in Japan rised to the highest level in relation to the dollar in 18 months on Monday. So we dont know what they really are doing down in there...

Reinvent business with digital economics

2009-09-17T22:14:00.001+01:00

Chris Anderson, Pop Artist

“Chris Anderson is a big idea-man”

Mr. Anderson wrote The Long Tail, a book about the economic miracle of Amazon.com, where he is telling about the internet's infinite shelf space, where companies could make more money selling a product online.

The point of this is that if every store do this, they will save a lot of money. The cost of owning a store, with all the cost adds that belong to this, employees, cleaning etc., is big. In relation to how its like to have an internet site, where you even could make some money on having. It will be more more revenue/profit and less expenditure,

On the other hand, removing this employment, which would be a shame especially in this period we are now with financial crisis, where we need to build the world again and go all the work.

The people have spoken..

2009-09-17T17:28:00.004+01:00

(The Norwegian people dared not seem like they wantet to take a chance on something new.. smart?)

Monday, September 14 election was held, in my country, Norway, where Arbeiderpartiet (the most popular over the last 20 years) with 35.4%, emerged victorious. With a red-green party(?). After the financial crisis, I think the people of my contry has choosen AP because of a certain security... (Almost 1 million persons who are working for the public, perhaps in fear of losing the comunity benefits, voted for AP. )

AP has now gone along with some other parties, again, to a large red-green majority. These are parties that's not particularly popular for the moment. Especially SosialistiskVensterparti(sosialistic) is much annoyed by the AP have chosen to go along with, (they did not get many votes).

- We have received the voters' trust to run the country for four more years, and with a red-green majority we will renew and strengthen the policy we have taken.("do something at all..?" many people are wondering..) We will administer the trust the voters have shown us with respect. Said the Prime Minister Jens Stoltenberg

Saying that, Everyone is in, where the main issues in the election battle is:
- Strengthen the care sector
- Work for all.
- Reducing greenhouse gas emissions in Norway

The financial crisis has shown us that work to the people is important. So then Arbeiderpartiet(= the parti of workers) got a step forward even with the name, and as they have been sitting there trought the crisis, and it havn't mhad that much affect for my contry. That is because we, in Norway, have a system with a lot of certain security, and all the money we got from taxes and from the oil. I think that is great.
The financial minister of norway, said:
- In unemployment the Government proposes to increase the use of oil revenues by an additional 9.5 billion.- Overall, we reach nearly 130 billion from oil revenues to secure people's jobs. We strengthen local government finances, we increase the number of students and puts in more labor.

The government's package of measures includes targeted tax cuts for businesses. It introduced a temporary access for companies to reverse losses against earlier profits. This estimated total of strengthening the companies at least 7 billion in 2009 and 2010, of which 3 ¼ billion in 2009.

- This is an accurate measure to help those companies that are struggling most to get over the slope, "says the finance minister Halvorsen. In addition, strengthened the "tax discovery-" law with 180 million.
Great emphasis , from the minister..

For me, these would have no defferent, no matter who had bee sitting there with the power.. However I do care a little bittle..

And we are all waiting in a extrem pain, for the government budget, which is coming october, the 13.....
So on....

Football

2009-09-17T09:46:00.002+01:00

Reduce the national debt

2009-09-16T20:38:00.000+01:00

Naill Ferguson(Historian and author):

The Organisation for Economic Co-operation and Development says that the UK national deficit will increase, and in 2010 rice up to 14 %, (highest in the western world).
Mr. Ferguson argues this with that the interest rates on government bonds to rise, that will make a inflation. The people who have pensions and saving will lose a lot here.

The author says that he does not believe that Growen Brown will survive the next election, and are saying that «the new government will have to show how it proposes to stabilise British public finances before we face a major crisis of confidence in our institutions and our currency.»

I agree with Mr. Ferguson that the government has made many mistakes before the crise. The british economy,

is sustainable by consumer spending, driven by record levels of personal debt that is secured, (most of it) against house prices that the Bank of England calls well above equilibrium in the market. However, the financial minister of the UK, Brown, gave no answer, and said only that there was no solution to this.

On the other hand, no government has made it perfectly and it is not easy to sit in government in such a period, because they do not know how to handle all the problems that comes up, and the time is running so fast.

to cool for school?

2009-09-14T16:05:00.000+01:00

Searching for successful entrepeneurs, I came upon this webpage, about successful entepreneurs who didnt need colledge. Another prove for that you don't need full educating to be successful in your life.

Part two..?

2009-09-13T21:40:00.000+01:00

I forgot the part about supply side... Keep on waiting waiting...

Knowledge of elasticity for a business..

2009-09-13T21:38:00.000+01:00

Is useful.
In economics, elasticity shows to witch the costumers change their demand in a kind of response to the price of the product.

We calculate elasticity as: % change in quantity / %change in price

Important with knowledge because a company needs to know what to do, to get the best, possible income. The companies have to assess changes in consumers demand, as a result of a change of the price. So when the value is bigger than one, it shows that the demand after the good, is affected by the prices. A value that's less than one shows that the demands not sensitive for the price(often inelasticity goods)

The marked for elasticity goods: Good's we have a lot of, with a big marked, ex: food, closes.

Companies have to put down the price, and maybe get under the competition to sell, because the price often decides witch company that sells the most.
Inelasticity: Oil, gas etc. Goods, where the demands are stable, (Things that people need, no matter what.)

Knowledge about the market is really important especially when a business put their product out to the marked.

So then, I also wanted to give you an example for a technique.
To sell a product:
After thorough research the company put the product out, to the market, with a cheap price (the
costumers are now getting to know the new product) then they will set the price up once, then raise the price again, often as far as they can, until the demand will be slightly smaller, (people will not pay as much for the product) and then put it down again. After doing this, the company also have seeing what the customer is willing to pay for the product.

Dragons' Den

2009-09-12T20:30:00.000+01:00

a) No, I wouln't but the product because I don't need it. And I think its like something you dont need that much, so you would pay extra for it.

b) Its a new thing on the marced (i think?) so maybe. People allways think that the new stuff is good, and usefull

Bank holds rates at record low

2009-09-12T11:36:00.000+01:00

MPC held the rates on 0,5% (record low) to increase income, and £175 billions for investment.
Mervin Kings proposal for £75 billion for fiscal stimulus, was outvoted by the MPC. So people are starting to get a little restless and irritable, and waiting for the MPC to do something, even the marked, on every plan, is going well.

Link to the article: http://www.independent.co.uk/news/business/news/bank-holds-rates-at-record-low-1784780.html

Hasty action on public spending would jeopardise economic recovery

2009-09-11T22:22:00.000+01:00

The reporter is critisising the government for hasty action on public spendings, on witch would jeopardise the economic ewcovery after the finansial crises. The reporter also points out reasent government dishonesty of which has weakend the labour's economic reputation. Furthermore he points out other governmental flaws during the financial crisis.

2009-09-09T09:45:00.000+01:00

chris's blog