Micro mnemonics

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Answer

Determinants of Demand

PASIFIC Population Advertisement Substitutes Income Fashion and trends Interest Rates Complements

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Determinants of Supply

PINTS WC Productivity (Labour/Capital) Indirect Tax No. Firms Technology Subsidy Weather Costs of production (oil, wages)

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Price Elasticity of Demand

SPLAT Substitutes Percentage of income Luxury/Normal Addiction / habit forming Time

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Price Elasticity of Supply

PSSST Production Lag Stock Substitutabilaty of FoPs Spare Capacity Time

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Total Renue

Elastic Only; Itchy Skin Elastic PED, opposite. P down TR up Inelastic Same. P up TR up

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Types of National economy measures

Nominal GDP: The value of all goods and services produced in an economy. 2.56tn Real GDP: Inflation adjusted GNP: Labour and land of citizens inc. overseas GNI: Income of all citizens of a country. Inc. taxes/subsidies

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Full employment income

The total income at the natural rate of unemployment.

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Savings/investment case study

Savings=investment as banks invest money, which is generally not stagnant. UK has low MPS so low investment, while Japan has high MPS so high investment which means LRAS can grow more continuously.

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Aggregate demand

Total demand for a country's goods and services at a given price level in a given time period. SPENDING not quantity C+I+G+(X-M)

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Consumption (Determinants)

Just over 65% UK AD. Discretionary after tax and rent etc. Interest rates (Monetary Policy Committee) Eval - anticpated future i/r. Confidence (American<should be). Wealth a/depreciation.

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Investment

17%. 25% this from gov investment. Retained profits. Expectations/confidence. Demand for exports. i/r & credit access. Corporate tax, subsidy and policy. %return expected must be > i/r. Predicted consumption. Accelerator

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Gov spending

20%, more since Cov and labour. £1.222tn. Doesn't include social protection or investment, with which it would be 45%. Provision of public goods. Health isnt but is made accessible. Very large debt - £100bn repayment. Current and capital expenditure

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(X-M)

-2%. For Netherlands each individually greater than 100%.

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Accelerator

I depends on AD and is a component of AD creating something of a positive feedback loop. This makes I fairly volatile bc the loop is bidirectional.

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Price mechanism acronym

ARSI: Allocate scarce resources, Ration scarce resources (demand side), Signal the change, Incentivise based on profits (suppliers).

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Producer and consumer surpluss

Triangles on the diagram which represent the number of consumers/producers who are interacting with the market at a lower/higher price respectively than they were willing. Society surplus is their sum.

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Economies of scale

Really Fun Mums Try Making Pies

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RFMTMP

Risk bearing Financial loans Managerial Technological Marketing Purchasing bulk

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Diseconomies of scale

CCC Control Coordination Communication

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Monopoly power

BAND Barriers to entry Advertising No. Firms Differentiation of product

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Created by: pemmb