Welfare Economics & Fiscal Illusion: Key Economic Theories
Welfare Economics: Foundations & Concepts
Welfare economics aims to move beyond purely ethical judgments (e.g., “more is better than less”) to achieve a universally accepted supreme goal: maximizing social welfare. It represents a monistic approach to economic well-being.
Classical Welfare Economics
Developed by economists like Alfred Marshall and Arthur Pigou. Marshall defined production and economic well-being in terms of happiness, focusing on identifying the economic policy factors that contribute
Read MoreEconomic Principles: Elasticity, Surplus, and Taxation
Understanding Price Elasticity of Demand
1. What does the price elasticity of demand measure?
- e. a consumer’s sensitivity to a price change
Reference: Determinants of the Price Elasticity of Demand
2. Ice Skates Demand Elasticity Analysis
From the accompanying table, we would expect that, for recreational skaters, the price elasticity of demand for ice skates between $10 and $20 to be ________ than that of hockey players because ________.
| Price of Ice Skates | Quantity Demanded (hockey players) | Quantity |
|---|
Money Supply & Inflation: Definitions and Measurement
Concept of Money Supply
Money supply refers to the amount of money in circulation within an economy at any given time. It is the total stock of money held by the people, including individuals, firms, and state constituent bodies, excluding the State Treasury, Central Bank, and Commercial Banks. Cash balances held by federal and federating governments with the Central Bank and in treasuries are not considered part of the money supply because they are created through administrative and non-commercial
Read MorePersonal Finance Foundations: Secure Your Financial Future
Chapter 1: Financial Planning Fundamentals
- Financial Planning is the process of managing your money to achieve personal economic satisfaction.
Key Components:
- Budgeting & managing liquidity
- Financing large purchases (e.g., cars, homes)
- Managing risk (insurance)
- Investing money for the future
- Planning retirement & estate
Main Goals:
Accumulate wealth, protect assets, meet life objectives.
Chapter 2: Time Value of Money Explained
- TVM means money today is worth more than in the future due to its earning
Essential Business Finance and Loan Insights
Sources of Business Finance Beyond Traditional Lenders
Sources of finance for businesses include:
- Equity: Funds raised by selling ownership shares.
- Debt: Borrowed money that must be repaid, often with interest.
- Debentures: Long-term debt instruments issued by companies.
- Retained Earnings: Profits kept by the business for reinvestment rather than distributed to shareholders.
- Term Loans: Loans repaid over a set period with fixed or variable interest rates.
- Working Capital Loans: Short-term loans to cover
Essential Macroeconomic Concepts and Policies
Understanding the Natural Rate of Unemployment
The natural rate of unemployment is a combination of frictional, structural, and, as sometimes referred to, surplus unemployment. It is the minimum unemployment rate resulting from real, or voluntary, economic forces.
Inflation’s Impact on the Value of Money
Inflation significantly decreases the value of a dollar over time. As inflation increases the prices of goods and services, the amount of goods and services you can buy with a dollar in the future
Read More