Parkes' Economics for Business I Assignments, Winter 2013 - 2014
[Andrew's SILC Home
Page, Shanghai, China]
Tentative Schedule and Course Assignments:
March 4, 2014 Chapter 30: Money, Banking, and the Federal Reserve System and Chapter 31: Monetary Policy
Monetary Role of Banks
- What Banks Do
- The Problem of Bank Run
- The Required Reserve Ratio
Bank Regulation
Krugman's Chapter 30 PPT, 2nd Edition
Chapter 31: Monetary Theory
Opportunity Cost of Money - the "price" (interest rate)
Two Theories of Money Demand
- Liquidity Preference Theory (Money Demand depends upon the interest rate)
- Nominal versus Real Demand for Money
- Shifts in the Demand for Money Curve: Price Level changes, Technology and Income Changes
- Velocity Approach to Money Demand
- Quantity Equation
- Percentage Change Identity: %M + %V = %P + %Y
Krugman's Chapter 31 PPT - Second Edition
March 6, 2014 Chapter 31: Monetary Policy
Monetary Policy and the interest rate
- Contractionary Monetary Policy
- Expansionary Monetary Policy
The Effects upon Aggregate Demand
Fighting a Recessionary Gap
Cooling an Inflationary Gap
Short Run versus Long Run Effects
Price level effect in the long run on Money Demand, interest rates return and higher costs decrease business firms' supply
Review
Review Terms, Definitions, and Other Things
Final Exam, Chapters 12 & 13, 22 - 24 and 27 - 31 on Tuesday, March 11, 2014
From 11:45 am to 13:45 pm:
Classrooms 2111, 2112, and 2212
PAST ASSIGNMENTS:
- Chapter 29: Fiscal Policy
- Taxes, Purchases, and Transfers
- The Government Budget and Total Spending
- Expansionary and Contractionary Policies
- Lags in Fiscal Policy!
- 2. Fiscal Policy and the Multiplier
- Government Spending versus Taxes and their Multiplier Effects
- How Much Bank for the Buck?
- Automatic Stabilizers
- 3. The Budget Balance
- Saving (Borrowing) by the Government
February 27, 2014 Chapter 29: Fiscal Policy and Chapter 30
- Chapter 29: Fiscal Policy
- 3. The Budget Balance
- Saving (Borrowing) by the Government
- Cyclically Adjusted Budget Balance
- Should the Budget be Balanced?
- Federal Government's Budget Constraint PPT
- 4. Long-Run Implications of Fiscal Policy
- Deficits, Surpluses, and Debt
- Problems With the Rising Government Debt
- Deficits and Debt in Practice?
Krugman's Chapter 29 PPT, 2nd Edition
Chapter 30: Money, Banking, and the Fed
The Meaning of Money
What is Money?
The Role of Money
Types of Money
Measuring the Money Supply
Krugman's Chapter 30 PPT, 2nd Edition
Week 8
February 18, 20143 Chapter 27: Income and Expenditure
- Review Chapters 22-24 and New Data Statistics from tradingeconomics.com and the U.S.A. and P.R.C. governments
- Chapter 27: Income and Expenditure
- The Multiplier
- MPC and MPS equal ONE!
- First, second and third rounds, etc.
- Autonomous change in Aggregate Spending
- The Multiplier
- Consumer Sending
- Krugman's Chapter 27 PPT - Second Edition
February 20, 2014 Chapter 28: Aggregate Supply and Aggregate Demand
- Chapter 27: Income and Expenditure
- Chapter 28: Aggregate Supply and Aggregate Demand
- Aggregate Supply Curve
- In the Short-Run slopes upward
- Wage contracts make wages "Sticky" causing the upward slope
- Shifts in AS
- Changes in Commodity Prices
- Changes in Nominal Wages
- Changes in Productivity
- In the Long Run Aggregate Supply is vertical - Called Potential Output
- From the short-run to the long-run
- wages change affecting business costs which affect suppliers and shift short-run AS
- The Aggregate Demand Curve
- Why the Aggregate Demand Slopes Downward
- Wealth Effect
- Interest Rate Effect
- Why the Aggregate Demand Curve Shifts
- Changes in Expectations
- Changes in Wealth
- Changes in the Stock of Physical Capital
- Changes in Government Policies - Monetary and Fiscal Policy
Problem Set #6: Keynesian Cross Algebra - ANSWERS
Krugman's Chapter 28 PPT - 2nd Edition
February 21, 2014 Chapter 29: Fiscal Policy
Boxing Day Make-up Class Room 2212, 1:00 - 2:30
- Review from Thursday/Friday and Self-Correcting Mechanism
- Chapter 28: Aggregate Supply and Aggregate Demand
- Aggregate Supply Curve
- In the Short-Run slopes upward
- Wage contracts make wages "Sticky" causing the upward slope
- Shifts in AS
- Changes in Commodity Prices
- Changes in Nominal Wages
- Changes in Productivity
- In the Long Run Aggregate Supply is vertical - Called Potential Output
- From the short-run to the long-run
- wages change affecting business costs which affect suppliers and shift short-run AS
- The Aggregate Demand Curve
- Why the Aggregate Demand Slopes Downward
- Wealth Effect
- Interest Rate Effect
- Why the Aggregate Demand Curve Shifts
- Changes in Expectations
- Changes in Wealth
- Changes in the Stock of Physical Capital
- Changes in Government Policies - Monetary and Fiscal Policy
Week 7
January 7, 2014 Finish Chapter 13: Perfect Competition and the Supply Curve
- Review the Midterm Exam
- Finish Chapter 13: Perfect Competition and the Supply Curve
- The Industry Supply Curve
- Entry and Exit - Long Run Market Equilibrium
- Shifts in Demand and the 4 panel diagram
Perfect Competition with Increasing Cost Industry - 4 panel diagram homework answers
Krugman's Chapter 13 PPT - Second Edition
January 9, 2014 Chapter 22: The Big Picture, Chapter 23: Tracking the Economy and Chapter 24: Unemployment and Inflation
- Chapter 22: The Big Picture
- Chapter 23: Tracking the Economy and Chapter 24: Unemployment and Inflation
- What is a price index and how do we calculate them? CPI, GDP deflator
- Problem Set #5 - CPI, GDP deflator
- NIPA - National Income and Product Accounts
- SEE PPT - Personal Income, National Income, GDP versus GNP - how are they related?
- Calculate Growth Rates
- Calculate CPI and GDP delfator
- GDP and National Income
- NIPA - National Income and Product Accounts
- Circular Flow: Spending equals Income
- SEE PPT - Personal Income, National Income, GDP versus GNP - how are they related?
- Is the CPI biased? p. 607
- Unemployment Rate calculation
- Discouraged Workers
- Frictional, Structural, and Cyclical Unemployment
- The Natural Rate of Unemployment
- Minimum wages, Labor Unions, and Efficiency Wages
- High inflation's economic costs: Shoe Leather costs, menu costs, Unit of account costs
- Winners and Losers from Inflation
- Disinflation
- NIPA PPT - A summary of equations written on the board today.
- Krugman & Wells Chapter 23 PPT - Second Edition
- Krugman & Wells Chapter 24 PPT - Second Edition
Week 6
December 30, 2013 Chapter 12: Inputs and Costs
- Chapter 12: Inputs and Costs
- The Production Function
- Fixed versus Variable Inputs
- Short run versus Long Run
- Total Product and Marginal Product Curves
.
Production to Cost Curves
Short Run Total, Average and Marginal Cost curves
Long Run AC and MC curves
Returns to Scale
Constant Returns to Scale
Increasing and Decreasing Returns to Scale
Krugman's Chapter 12 PPT - Second Edition
January 2, 2014 Chapter 13: Perfect Competition and the Supply Curve
- Chapter 13: Perfect Competition and the Supply Curve
- Perfect Competition
- 4 Conditions & Assumptions for PC
- Optimal Output Rule: MR = MC
- MR is the Price for Price Taking Firms
Short-Run VS. Long-Run
Profit and Loss in the Short-Run
The Shutdown Price and the Short-run Supply curve for the firm (min AVC)
Breakeven Price: Minimum ATC
Only the Short-Run will be covered on the Midterm Exam
Quiz #11 - Cost Quiz
Krugman's Chapter 13 PPT - Second Edition
Review for the Midterm Exam
- Chapters 1 - 7 and 9 - 12 (to page 344)
January 3, 2014 Midterm Exam!
- Chapters 1 - 7 & 9 - 12 (to page 344), Friday 2:00 pm - 3:30 pm: Rooms 1231, 1233 & 1203
Week 5
December 24, 2013 Chapter 11: Consumer Preferences and Consumer Choice
- Chapter 10: The Rational Consumer
- Utility: Getting Satisfaction
- The Consumption Bundle
- The Utility Function and Marginal Utility
- The Principle of Diminishing Marginal Utility
Budgets and Optimal Consumption
Budget Constraints and Budget Lines
Optimal Consumption Choice
Spending the Marginal Dollar
Marginal Utility per dollar
Optimal Consumption Rule
From Utility to the Demand Curve
The Substitution Effect
The Income Effect
In Class Homework Answers page 268, #5 and #6a and #6 b & c
Krugman's Chapter 10 PPT - Second Edition
December 27, 2013 Finish Chapter 11
- Chapter 11: Consumer Preferences and Consumer Choice
- Mapping the Utility Function
- The Consumption Bundle
- The Utility Function and Marginal Utility
- The Principle of Diminishing Marginal Utility
Budgets and Optimal Consumption
Budget Constraints and Budget Lines
Optimal Consumption Choice
Spending the Marginal Dollar
Marginal Utility per dollar
Optimal Consumption Rule
Quiz #10 - Income and Subsitution Effects of a Price Decrease
Krugman's Chapter 11 PPT - Second Edition
Week 4
December 17, 2013 Chapter 7: Taxes and Chapter 9: Making Decisions
The Benefits and Costs of Taxation
The Revenue from an Excise Tax
Tax Rates and Revenue
Laffer Curve
The Costs of Taxation
The Deadweight Loss (DWL) of a Tax
Elasticities and DWL
Quiz #7 - Tax Incidence
Krugman's Chapter 7 PPT - Second Edition
Chapter 9: Making Decisions
Opportunity Cost and Decisions
Implicit and Explicit Cost
Accounting and Economic Profit
Marginal Decisions
Marginal Cost
Marginal Benefit
Optimal Quantity and the Principal of Marginal Analysis
Sunk Costs
Present Value - the interest rate and discounted PV
Quiz #8 - Tax Brackets
Krugman's Chapter 9 PPT - Second Edition
December 19, 2013 Chapter 10: The Rational Consumer
- Chapter 9: Making Decisions
- Opportunity Cost and Decisions
- Implicit and Explicit Cost
- Accounting and Economic Profit
- Marginal Decisions
- Marginal Cost
- Marginal Benefit
- Optimal Quantity and the Principal of Marginal Analysis
Sunk Costs
Present Value - the interest rate and discounted PV
Krugman's Chapter 9 PPT - Second Edition
Chapter 10: The Rational Consumer
Utility: Getting Satisfaction
The Consumption Bundle
The Utility Function and Marginal Utility
The Principle of Diminishing Marginal Utility
Quiz #9
Krugman's Chapter 10 PPT - Second Edition
Week 3
December 10, 2013 Chapter 5: Price ceilings and floors
- Chapter 5: The Market Strikes Back
- Problem Set #1 - Graphing Price Ceilings and Floors and Answers
- Why Governments Control Prices
- Price Ceilings
- An Example
- Inefficiently low quantity
- Dead Weight Loss
- Winners, Losers, and Rent Control
- Inefficient Allocation to Consumers and Wasted Resources
- Inefficiently Low Quality and Black Markets
Price Floors
Minimum Wage
Inefficiently Allocations
Wasted Resources
Illegal Activity
Expectations
Controlling Quantities
Wedge between Supply Price and Demand Price
Costs of Quantity Controls
Quiz #5 - p. 139, #2 - Price Floors and Ceilings
Krugman's Chapter 5 PPT - Second Edition
December 12, 2013 Chapter 6: Elasticity
- Chapter 6: Elasticity
- Defining and Measuring Elasticity
- Calculating the Price Elasticity of Demand
- Midpoint Method
Interpreting the Price Elasticity of Demand, pp. 148-155.
How Elastic is Elastic?
Perfectly and Unit Elasticity
Total Revenue (Expenditures)
Price Effect and Quantity Effect
Price Elasticity Along the Demand Curve
What Factors Determine the Price Elasticity of Demand?
Other Demand Elasticities
Cross-Price Elasticity of Demand
Income Elasticity of Demand
Price Elasticity of Supply
Problem Set #2 - Due Tuesday, December 17, 2013 and Answers
Quiz #6 - Elasticities
Krugman's Chapter 6 PPT - Second Edition
Week 2
December 3, 2013 Chapter 3: Supply and Demand
- Chapter 2a: Appendix on Math and Graphing - take notice you need to remember these concepts
- Chapter 3: Supply and Demand: A Competitive Market
- The Demand Curve
- The Law of Demand (Quantity Demanded versus Demand)
- Prices of Related Goods Substitutes and Complements)
- Income changes (Normal versus Inferior Goods)
- Tastes and Preferences
- Expectations
- Number in the Marketing Area
- The Supply Curve
- Quantity Supplied versus Supply Changes
- Input Prices
- Prices of related goods
- Technology
- Expectations
- Number of Suppliers
Equilibrium
Surpluses and Shortages
Shifts in the Curves
Quiz #3 - Simultaneous Shifts
Krugman's Chapter 3 PPT - Second Edition
December 5, 2013 Chapter 4: Consumer and Producer Surplus
- Chapter 4: Consumer and Producer Surplus
- Consumer Surplus and the Demand Curve
- Willingness to Pay
- Area under the demand curve and above the price
- Change in Price, Change in Consumer Surplus
Producer Surplus and the Supply Curve
Cost and Producer Surplus
Area above the supply curve and below the price
Change in Price, Change in Producer Surplus
Gains from Trade and CS/PS
The Efficiency of Markets
Equity and Efficiency
Property Rights
Economic Signals
Inefficiencies
Market Failures
Quiz #4 - Ch. 7 #4, Consumer & Producer Surplus
Krugman's Chapter 4 PPT - Second Edition
Chapter 5: The Market Strikes Back
Problem Set #1 - Graphing Price Ceilings and Floors
Why Governments Control Prices
Price Ceilings
Week 1
November 26, 2013 Chapter 1: Economy
- Chapter 1: First Principles
- Choices
- Resources
- Scarcity
- Trade-offs
- Marginal Analysis
- Incentives
How Economies Work
Interaction
Trade
Gains from Trade
Specialization
Equilibrium
Efficiency vs. Equity
Krugman's Chapter 1 PPT - Second Edition
Chapter 2: Economic Models: Trade-offs and Trade
Other Things Held Equal Assumption
A Model: Trade-Offs
Production Possibilities Frontier
Efficiency
Opportunity Cost
Economic Growth
Factors of Production
Technology
November 28, 2013 Chapter 2: Economic Models: Trade-offs and Trade
- Chapter 2: Economic Models: Trade-offs and Trade
- Other Things Held Equal Assumption
- A Model: Trade-Offs
- Production Possibilities Frontier
- Efficiency
- Opportunity Cost
- Economic Growth
- Factors of Production
- Technology
Comparative Advantage and Gains from Trade
Comparative Advantage
Absolute Advantage
Comparative Advantage and International Trade
Transactions and the Circular Flow
Barter
Circular-Flow Diagram
Households and firms
Markets for Goods and Services
Factor Markets
Income Distribution
Positive versus Normative Economics
Quiz #2 - PPF, Ch. 2 #2
In Class Homework #1 - PPF, Ch. 2 #4
Krugman's Chapter 2 PPT - Second Edition
[Andrew's SILC Home Page, Shanghai, China]
email: andrew at andrewparkes.com
Last Update: February 28, 2014
By Andrew L. H. Parkes, Ph. D.
