AS & AD

Chapter 4 summary

Aggregate demand:refers to the total demand for goods and services from all sources in the economy. It including :
*consumer spending
*investment by firms in plant,machinery and stocks
*government spending
*the net effect of international trade, i.e. exports minus imports
so easy to remember - AD=C+I+G+(X-M)

Transfer payments: money treansferred from one person or group to another not in return for any good or service(the best-known transfer payments are pensions and social security payments such as income support.)

Jobseekers' allowance:the benefit paid to someone who is unemployed for the first six months.

trade surplus:the value of exports exceeding the value of imports(X-M=positive)

trade deficit:the value of imports exceeding the value of exports(X-M=negative)

consumer confidence:how optimistic consumers are about future economic prospects.

rate of interest:the charge for borrowing money and the amount paid for lending money.

Net savers: People who save more than they borrow ( clever people )
Wealth: a stock of assets, e.g. property, shares and money held in a savings account.
Inflation: a sustained rise in the price level
Distribution of income: how income is shared out between households in a country.

Saving: Real disposable income minus spending

APC:the proportion of disposable income spent. It is consumer expenditure divided by disposable.

APS:the proportion of disposable income saved.It is saving divided by disposable income.

dissave:spent more than disposable income.

saving ratio:savings as a proportion of disposable income.

Macroeconomic equilibrium: A situation where aggregate demand equals aggregate supply and real GDP is not changing.
The circular flow of income: The movement of spending and income throughout the economy.
Factor services: the service provided by the factors of production.
Leakages: Things that reduce AD; things like imports, savings and taxes.
Injections: additions of extra spending into the circular flow of income.( consisting of: Investments, Government spending and Exports)
If injections equals leakages there will be a macroeconomic equilibrium.
Multiplier effect: The process by which any change in a component of aggregate demand results in a greater final change in real GDP





AD & AS (curve+videos):

Note that the government must shift the AD curve to the right FARTHER than the actual real GDP gap. Why? Because as the AD curve shifts right, prices rise as well.

AS

Alcohol...

People are drinking more alcohol year by year,The amount of alcohol consumed show us per person has risen by 10% since 2000 .

Also the latest figures show a third of men and a fifth of women drink more than the recommended daily limits. And it already over the NHS recommends a limit of three to four units of alcohol per day for men, and two to three units for women.

Why people want to drinking more alcohol rather than water?

Because people have limited information to help them make healthy choices about their alcohol consumption .

Moreover,the amount of pure alcohol consumed has risen by nearly a tenth from 8.4 litres per year per person to 9.2 litres. More and more people need alcohol.

People have no enough information about alcohol to make good choice for their health and also should more power to help people enjoy without harming and the drinks industry has a responsibility to provide clear information so that people make best choice about alcohol.

China 60 years Old

Today is National Day for China

60 years

So 60 years ago, China was a pool and behindhand country.

But now , everything has been changed!

What can we know for China between 1949-2009?

There are some very important things let you know:

1. Look at these Pictures and find Different

Years 1949:

NOW 2009:

There just a few ...

2. Years 2008

Why we could hele Olympics Games?

Why we could developing Military Defense?

We need nuch nore money to do all of these, where were money come form?

We have to make money

Year by year the Economic development China batter and batter,many Foreign businessmen go to China because China has Openning Market ,However the market has a large development space ,also Intense market competition and fair.

The government made more plans for Business International Trade and GDP growth.

More and more want to china to earn money and developping own Business.

By the way I love my country I love China!

Chapter 1 summary

Definitions:

Economics: The study of how to allocate scarce resources in the most efficient way.

Household: Group of people whose spending decisions are connected.

Economic problem: How to allocate scarce resources among alternative uses.

Model: A simplified view of reality that is used by economists as a means of explaining economic relationships.

Factor of production: The resource inputs that are available in an economy for the production of goods and services. Land, Capital, Labor and entrepreneurship.

Factor endowment: The stock of factors of production.

Production: The output of goods and services.

Goods : tangible products such as cars, food and washing machines.

Services: Intangible products, such as banking, beauty therapy and insurance.

Land: natural resources in an economy

Capital: man-made aids to production.

Entrepreneurship: Management.

Labour: The quantity and quality of human resources.

Opportunity cost : The cost of the next best alternative which is foregone when a choice is made.

Want: anything you would like, irrespective of whether you have the recourses to buy it.

Scarcity: A situation where there are insufficient resources to meet all wants.

Specialisation: The concentration by a worker or workers, firm region or whole economy on a narrow range of goods and services.

Exchange: The process by which goods and services are traded.

Subsidy: A payment by a governing body to encourage the production or consumption of a product.

Developed economy: an economy with a high level of income per head

Developing economy: an economy with a relatively low level of income per head.

Economic system: the way in which production is organised in a country or group of countries.

Economic growth: causes increase of productive capacity due to an increase of capital.

Production possibility curve:

The production possibility curve shows how resources are allocated. It shows the maximum quantities of different combinations of output of two products, given current resources and the state of technology.

that is a PPF:Economic market systems :

Market economy

Planned economy

Mixed economy

Homework for economic

Let's talk about the benefits and costs of the biggest ship around the world!

benefits

:It can bemake less pollution per unit carried tthan else, because the ship can carry much more containers. Also can decrease costs for teansport. . Also, it is more labour has job to dobecause the crew only consists of some crews. Fuel costs per unit carried are reduced because of the capacity of the ship.

Costs:

Building a biggest ship have to costs a lot also repair it.And size of ship is a big problem.If from China to UK,the ship will have to cross Suez-canal,it will be too small to cross for biggest ship.So the ship have to find another way on the west of the United States.

There are just two problems,in fact it has more than two problems on this.

And because of the size, the ship will very slow and time will be longer than normal ship.

Benefits for CHINA AND UK:

1)It can creat more jobs for people.

2)lower import prices will fall inflation.

3)The intellectual property rights will make a lot of money for the UK and China.

The original:Let's talk about the benefits and the cost of use the biggest ship to transport!benefits:I think there will be less pollution for unit carried, also massive the capacity, because they can transport a lot containers. Also it will reduce the price to consumer, because the cost of transport will decrease by the big ship. low labour cost as well, because there are only 13 crews which this case study mentioned. Also low fuel cost per container carried.costs:Build a biggest ship must cost a lot, also if a ship is very big, the speed will be reduce because when they want to pass some canal, for example Suez canal, they will use a lot of time. Also ore railway line needed. If they want to save money, the capacity of this ship must be full.Then, I would like talk about if UK trade with China.If UK trade with China, they can spend less money to import, also when they transport some products from China to UK, they can creates jobs for transport. Also it leading to lower cost push inflation, because the products from China is cheap which reduce the price of goods. However, trade with China might reduce the manufacture job in UK.

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