Social Media Marketing Today

Ch 2

Linear PPC- Illustrate constant opportunity cost.

Constant Opportunity Cost- all resources were equally efficient in all uses.

Law of increasing opportunity cost- the phenomenon of increasing unit cost as an ecoomy increases its production of a commodity.

Concave PPC- illustrates increasing opportunity cost.

Productive efficiency- economy cannot increase its production of commodity without reducing its production of some other commodity.

Production inefficiency- its possible to produce more of one commodity without producing less of some other commodity.

AN INCREASE IN THE QUANTITY OR QUALITY OF RESOURCES, OR AN INCREASE IN TECHNOLOGY, SHIFTS THE P-P CURVE OUTWARD.

Cost Benefit approach- an analysis in decision making that involves the comparison of costs and benefits.

Production possibility schedule (P-P)- a table showing various combinations of goods and services that can be produced with full utilization of all resources and a given state of technology.

Production possibilities curve(p-p)- a graph showing all combinations of goods and services that can be produced if all resources are fully employed and technology is constant.

Circular flow- an economic model that shows the flow of resoucres goods and income between sectors of the economy.

CH3

DEMAND

Demand – the various quantities of a good or services that people are willing and able to buy at prices during a specific period.

Demand schedule- a table showing the inverse relationship between price and quantity demanded.

Quantity demanded- the quatity that people will be willing and able to buy at a specific price.

AS THE PRICE OF GOODS AND SERVICES FALLS, THE QD INCREASES; AS THE PRICE RISES, QD DECREASES.

3 explanation that effects the price goes up and qd goes down:

Market- Size Effect- caused by a change in the number of buyers in the market as a result of a change in price.

Real income effect- purchasing power.

Substitution effect- people switching to or from a product as its price changes.

Demand curve- a downward- sloping curve showing the inverse realationship between price and quantity demanded.

MAIN FACTORS THAT AFFECT THE DEMAND :

INCOME

PRICE OF RELATIVE GOODS

TASTES AND PREFERENCES

EXPECTATIONS

POPULATION

Normal goods- demand increases as income increases and for which demand falls as income falls.(blue ray movies, laptop, computers and vacation pachages).

Inferior goods- demand increases income falls, demand decreases income increases.(macaroni and cheese( instead of reastaurant dinner), beans(instead of meat), used clothing (instead of new clothes)).

Substitude-good that can be used in place on another. (Lemon and lime, sugar and honey, butter and margarine, tea and coffe)

Complements- goods that are consume (used) together. (auto and gasoline, computers and flash drives, coffe and cream)

Demand shifters- non price determinants that shift the demand curve.

THE FACTORS THAT SHIFT DEMAND CURVE(DEMAND SHIFTERS)

RIGHT:

Income rices(normal good), price of complement falls, increase in preference, price rise expected, increase in population.

LEFT:

Income rices (inferior goods), price of substitute falls, Fall in income expected.

SUPPLY

Supply- the various quantities of a good or services that sellers are willing and able to offer for sale at various prices during a specific period.

Supply schedule- a table showing the direct relationship between price and quantity supplied.

Law of supply- direct relationship among price and qs

Supply curve- an upward- sloping curve showing the direct relationship between price and QS.

AS THE PRICE FALLS, QUANTITY OFFERED FOR SALE DECREASES, PRICE RISES QS INCREASES.

MAIN FACTORS AFFECT THE SUPPLY:

NUMBER OF PRODUCERS

PRICES OF RELATED PRODUCTS

TECHNOLOGY

EXPECTATIONS

COST OF INPUTS

Substitutes in production- goods that are produces as alternatives to each other(lettuce and tomatoes( a farmer can produce one of the other on the same land), and lather bags and belts(same type of resources)

Complements in production of joint products- gods such that the production of one implies the production of the other.(beef and hides are a classical example)

THE FACTORS THAT SHIFT SUPPLY CURVE(SUPPLY SHIFTERS)

RIGHT:

Number of sellers increases, technology increases, favorable weather, lower interest cost.

LEFT:

Price of Joint product falls, Price rice expected, unfavorable weather, higher wages.

Market condition- the relationship between QD and QS

Qd>Qs= shortage exists

Qd<Qs= surplus exists

Qd=Qs – the market is in equilibrium.

Equilibrium quantity- the quantity traded at the equilibrium price.

WHENEVER A SURPLUS EXISTS IN THE MARKET. IT WILL EXERT DOWNWARD PRESSURE ON THE PRICE.

SHORTAGE EXISTS, IT WILL AN UPWARD PRESSURE ON THE PRICE.

An increase in demand causes shortage that rices the price.

A decreases in demand causes a surplus that lowers the price.

An increase in supply causes surplus that lowers the price

An increase in demand and an increase in supply of the same size leave the price unchanged but increase the quantity.

A decrease in demand and decrease in supply= price unchanged but reduce the quantity.

A relatively large increase in demand and relarively small increase in supply rice both price and quantity.

The increase in supply is greater that the increase in demand= price falls but quantity increases.

Demand UP and supply DOWN equally= Price UP but quantity remains.

Demand Down and supply Up equally= price DOWN but quantity remains.

CH4

Invisible hand- the term used by Adam Smith to describe the market mechanism.

Great Depression- a period of severe economic slump lasting 10 years from 1929 to 1939.

Classical economic models- pre- Keynesian economic model that emphasized the market forces of demand and supply. It predicts that unemployment would cause wages to fall. The fall in wages would be an incentive for employers to hire more workers until the unemployment workers were all hired.

Fiscal policy- the use of government spending and taxes to regulate economic activity.

Keynesian economics- economics based on the premise that total output is determined by total spending. It emphasizes the demand side of the economy.

Stagflation- the simultaneous occurrence of high rates of inflation and high rates of unemployment.

Supply side- the production of cost side of the economy.

New classical economists- economists who emphasize wage and price flexibility and believe in rapid macroeconomic adjustment.

New Keynesian economists- economists who emphasize wage and price inflexibility and believe that markets can fail to adjust.

Macroeconomic policy- deliberate government action taken to achieve economic objectives.

Monetary policy- action taken by the central bank to change the money supply and interest rates to achieve economic objectives.

Income policies- actions taken by the government to control wages and prices to achieve economic objectives.

Transfer payments- payments that do not represent compensation for goods or services.

Consumer price index(CPI)- an index that measures the level of the prices of consumer goods and services.

CH5

National income accounting- the process of collecting, measuring, and recording data on the economy’s output.

Statistic Canada- the special federal government agency responsible for collecting and publishing national economic and social statistic.

Double counting counting an item more than once when measuring GDP.

Value added- the difference between the value of the output and the cost of the inputs.

Intermediate product- the outputs of one firm of industry that are used as inputs by other firms of industries.

Private transfer payments- transfers of purchasing power from one individual or group to another for which no gods and services are produced. (grants student, parents give to child)

Government transfer payments- payments made by the fovernment that do not represent payment for productive services(employment insurance payments, welfare payments, old age security payments.)

Income approach- a method of calculating GDP that involves measuring the total income generated in the process of producing the economy’s good and services.

Expenditure approach- a method of calculating GDP that involves measuring the total amount spent on the economy’s good and services.

TOTAL EXPENDITURE=TOTAL INCOME

Disposable income- aftertax income that an individual can spend of save.

Personal saving- the part disposable income not spent in consumer goods and services.

Base year of base period- a year chosen as a reference point against which other years are measured.

Price indexes- numbers that measure changes in prices over time.

Nominal GDP- expressed in current dollars

Real GDP- expressed in constant dollars.

Underground economy- all economic activities that are not reported to government and on which no taxes are paid.

Human Development Index (HDI) – a composite index designed to measure human well-being in a country.

CH6

Types of unemployment:

Frictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional unemployment-people moving between jobs or entering or re-entering the labor force. (college)

Full employment- a condition that prevails when the only unemployment is frictional and structural unemployment.

Seasonal unemployment- caused by season variations.

Structural unemployment- caused by a mismatch between the types of skills that unemployed workers possess and the types of workers that employers would like to hire.

Technological unemployment- a type of structural unemployment caused by the introduction of laboursaving equipment or methods of production.

Cyclical unemployment- arises because of declines in aggregate expenditure and aggregate output such as durng recessions.

Labour Force- the sum of all employed and all unemployed people who are willing and able to work.

Capacity utilization rate- shows the degree to which firms use their factories and machinery.

Labour force participation rate- expressed as a percentage of the adult population.

Employment rate.

Underemployment- workers accept low-paying jobs or part-time jobs because they cannot find a full-time job consistent with their qualifications.

Discourage workers- who have abandoned the search for jobs because the are unable to find work.

Potential GDP or full employment output- the economy’s output at full employment.

Actual output- the level of output produced by the economy.

Output gap or income gap- the difference between the potential output and the actual output of an economy.

Okun’s law- the assertation that real output falls by 3% for every 1% increase in the unemployment rate.

Rate of inflation- is the rate of change of the average level of prices.

(CPI)Consumer price index- measures changes in the prices of consumer goods and services.

(PPI)Producer price index- measures changes in the prices of producer goods.

GDP deflator- measures changes in the average level of prices of all final goods and services.

Core rate of inflation or core GDP- prices of gasoline and some food items.

Rule of 70- a formula for determining the number of years required for a number to double for a given rate of change.

Hyperinflation or runaway inflation- an excessively high rate of inflation usually 100% or more annually.

THE WINNERS OF INFLATION (DEBTORS(BORROWERS), PRODUCERS)

THE LOSERS – CREDITIORS, PEOPLE ON FIXED INCOMES.

CH7

Aggregate demand- the total demand for all goods and services in the economy during a specific period. The various level of real output that will be demanded at various price levels.

Fallacy of composition- the assumption that what is true of the parts must also be true of the whole.

Aggregate expenditure:

AE=C+I+G+(X-M)

Interest rate effect- the impact of changes in interest rates on consumption and investment and thus on total spending.

Foreign trade effect – changes in the price level on exports and imports and thus on the quantity of real GDP demanded.

Real wealth effect- changes in the price level on real wealth and thus on the quantity of real GDP demanded.

THE FACTORS that can shift aggregate demand curve are called AD shifters and are components of aggregate expenditure; CONSUMPTION, INVESTMENT, GOVERNMENT SPENDING, NET EXPORTS.

Consumer(consumer wealth(price remains CW increase, AD curve to the right), taxes, expectations, interest rate)

Short run- a situation in which firms can not very all their inputs or productive resources, thus, they operate with some fixed costs.

Short run aggregate supply curve- a graph that shows the various levels of real GDP that will be supplied at various price elvels in the short run.

Keynesian range- the horizontal section of the AS curve that represents high unemployment and low real GDP.

Intermediate range- the upward-sloping section of the AS curve that represents high price level.

Classical range- the vertical section of the AS curve that represents output at its maximum.

THE FACTORS that can shift Short run AS curve:

PRODUCTION COST, CHANGES IN RESOURCES, CHANGE IN TECHNOLOGY, TAX Policies, Natural Desaster.

AN INCREASE IN AS RESULTS IN INCREASE IN REAL GDP AND A FALL IN THE PRICE LEVEL.

A DECREASE IN AS RESULTS IN DECREASE IN REAL GDP AND AN INCREASE IN THE PRICE LEVEL.

CH11

Fiscal policy- is the use of government spending and taxes to influence economic behaviour. (budgetary policy)

The government budget- is a plan of hte indended revenues and expenditures of the government for the ensuring fiscal policy. It is the main instrument used by the government to execute its economic policies.

Budget defecit- government spending is greater than tax revenues (G>T)

Budget surplus- government spending is less that tax revenues (T>G)

Balane budget- government spending equals tax revenues (G=T)

Functional finance- the international use of defecits and surpluses to achieve desired economic objectives. (keynesian belives that it can be used as a weapon agains recessionary and inflationary situations)

Balance budget change in spending- a change in government spending equals the change in taxes.

Balanced budget theorem- if government spending and taxes increase by the same amount the resulting increase in income will equal the increase in government spending.

Automatic fiscal policy or automatic (built-in) stabilizers- the fiscal policy measures that are built into the economy. (progressive taxes, government assistance to agriculture and employment insurence)

Discretionary fiscal policy- deliberate changes in government spending and taxes to achieve desired economic objectives.

Fiscal drag- automatic stabilizer prevent the economy from recovering from a recession.

Contractiona fiscal policy- decreases in government spending and increases in taxes that result in a reduction in aggregate expenditure.

Expansionary fiscal policy- increases in government spending and increases in taxes that result in an increase in aggregate expenditure.

Full employment budget- the position of the budget if the economy were at full employment.

CHANGES IN THE BUDGET DO NOT NECESSARILY INDICATE CHANGES IN FISCAL POLICY. CHANGES IN THE FULL-EMPLOYMENT BUDGET, HOWEVER, DO INDICATE CHANGES IN FISCAL POLICY.

AN INCREASE IN GOVERNMENT SPENDING THAT INCREASES THE ECONOMY'S PRODUCTIVE CAPACITY (EDUCATION, HEALTH, ROADS RAIL, WATER) INCREASES AGGREAGATE SUPPLY. A DECREASE IN GS CAN REDUCE AS.

AN INCREASES IN TAXES REDUCES AS. A REDUCTION IN TAXES INCREASES AS.

Ch 13

Money- anything that is generally accepted as final payment for goods and services.(beads, salt, stones, gold, silver, paper, cattle)

SIX FEATURES THAT MAKE A CURRENCE WORK EFFECTIVELY:

1) Accepted and Secure

2) Portable and Divisible (coins and bills for easy to distribute)

3) Durable

4) Controlled (by a monetary authority)

ECONOMIC FUNCTIONS OF MONEY:

1) Medium of exchange

-Any item that is used to effect a purchase or a sale.

Double coincidence of wants- a situation in which a buyer finds a seller who has what the buyer wants and wants what the buyer has. ( a person who has wheat and wants to exchange it for shoes must find someone who has shoes and wants wheat in exchange.

2) Unit of account of measure of value – the common unit for expressing the value of goods and services.

3) Store of value or store of wealth- money or other assets put away for future use.

Liquidity- the ease with which an asset can be converted into cash with minimum loss.

Kinds of money:
1) COINS,

2) NOTES,

3) CHEQUING ACCOUNTS.

Currency or hand-to-hand money – the notes and coins that serve as a country’s medium of exchange.

Token money - money whose face value exceeds its commodity value.

Fiat money- legal tender money that is not backed by gold or any other precious metal.

Legal tender- money that must legally be accepted if offered as payment to settle debt.

Good money- money whose face value equals its commodity value.

Bad money – money whose face value exceeds its commodity value.

Gresham’s law- the hypothesis that bad money will drive good money out of circulation.

Chequing accounts –bank deposits that are transferable by cheques.

Demand deposits- bank deposits that can be withdrawn without prior notice.

Notice deposits- interest earning deposits subject to notice before withdrawal.

Near money- highly liquid assets that can be easily converted into currency or demand deposits without any appreciable loss of value.

M1- currency in circulation plus personal chequing accounts and current accounts at charactered banks.

M2- M1 plus personal saving accounts and other chequing accounts, terms deposits, and non-personal notice deposits.

M2+ = M2 plus deposits at non-bank deposits-taking institutions.

M2++= M2+ along with mutual funds and CANADA SAVING BONDS.

M3= M2 plus chartered bank non-personal term plus foreigh currency deposits of residents.

CH14

Banking System- the association of the central bank and the chartered banks as part of a larger financial networks.

FINANCIAL SYSTEM:

1)The Bank of Canada

2)Chartered banks

3) Near banks

4) Other financial institutions.

THE FINANCIAL SYSTEM CONSISTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS THAT PROVIDE A VARIETY OF FINANCIAL SERVICES TO THEIR CUSTOMERS.

Near banks- financial institutions other than banks that accept deposits from the public. ( caisses populaires, credit union, trust companies, mortgage loan companies)

Date: 2015-01-29; view: 948