ECON101

ESSAY

-Foreign exchange
-AE questions
-Demand pull/Cost push Fiscal or Monitory policy
- Money market (Demand/Supply)

(Definition of Economics)

Scarcity refers to the situation where resources (like labor and time) are limited but the wants are unlimited.

(GDP)
- GDP DEFINED
GDP or gross domestic product is the market value of all final goods and services produced in a country in a given time period.

- Final Goods and Services
GDP is the value of the final goods and services produced.
A final good (or service) is an item bought by its final user during a specified time period.

Real GDP per capita = Real GDP/Population

(Real GDP Fluctuations )
A business cycle is a periodic but irregular up-and-down movement of total production and other measures of economic activity.

Every cycle has two phases:
1 Expansion
2 Recession and two turning points:
1 Peak
2 Trough

(List 4) Factors not in GDP that influence the standard of living are * Household production * Underground economic activity * Health and life expectancy * Leisure time * Environmental quality * Political freedom and social justice

(Fixed Prices and Expenditure Plans)

Disposable income is either spent on consumption goods and services, C, or saved, S.
That is,
Yd = C + S

(MARGINAL PROPENSITY TO CONSUME)

It is calculated as the change in consumption expenditure, △C, divided by the change in disposable income, △Yd, that brought it about.
That is,
MPC = △C ÷ △Yd

(Other Factors Affecting Consumption)

Other factors affecting autonomous Consumption:
2. Wealth (Shares, property and inheritance)
3. Interest rate
4. Future income
Therefore the consumption function can be written as: C = a + bYd or C = a + b(Y-T)
Where a refers to refers to autonomous C