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Course notes quick navigation
1 Introductory concepts 2 Market mechanism 3 Elasticities 4 Market structures 5 Market failures 6 Macro economic activity/eco growth 7 Inflation 8 Employment & unemployment 9 External Stability 10 Income distribution 11.Factors affecting economy 12 Fiscal/Budgetary policy 13 Monetary Policy 14 Aggregate Supply Policies 15 The Policy Mix
You should notice that shifts of the demand or supply curves push markets into disequilibrium that is either characterised by an excess demand (shortages) or an excess supply (surpluses). It is this imbalance between the demand and supply that creates pressure for prices to converge towards equilibrium. Overall, markets at any time will either be in a state of equilibrium or disequilibrium. Any market in disequilibrium will have been caused by a shift to the left or right of the demand or supply curves (loosely speaking, increases or decreases of demand or supply). The effects on markets can be summarised in the four separate demand and supply diagrams.
In each case, the market starts in equilibrium, with price at P1. Then the market is disturbed by a change (or shift) in demand or supply which results in the existing price (P1) being either too low or too high. The market is no longer in equilibrium as a price that is too high reflects an excess supply (i.e. a surplus) and a price that is too low reflects an excess demand (i.e. a shortage).
When an excess supply develops (e.g. because of an increase in supply or a decrease in demand) normal market forces will force the price downwards. The lower price results in more demand by consumers as they are enticed by a cheaper product (an expansion of demand along the demand curve) and less supply as producers are deterred by lower prices and profits (a contraction along the supply curve). This expansion of demand and contraction of supply will continue to occur until the excess supply is eliminated and the price eventually rests at its new lower equilibrium price of P2.
Similarly, when an excess demand develops (e.g. because of a decrease in supply or an increase in demand) normal market forces will force the price upwards. The higher price results in less demand by consumers as they are deterred by a more expensive product (a contraction of demand along the demand curve) and more supply as producers are encouraged by higher prices and profits (an expansion along the supply curve). This expansion of supply and contraction of demand will continue to occur until the excess demand is eliminated and the price eventually rests at its new higher equilibrium price of P2.
What is economics? |
Relative scarcity |
Opportunity cost |
Production possibility curve |
Efficiency |
Basic economic questions |
Allocative efficiency |
Technical efficiency |
Intertemporal efficiency |
Dynamic efficiency |
Markets versus planning |
What is a market? |
Demand for goods and services |
Supply of goods and services |
Equilibrium |
Shifts of demand |
Shifts of supply |
Convergence to equilibrium |
Factors influencing decision making |
Excess supply |
Excess demand |
Consumer decisions |
Producer decisions |
Government decisions |
Decisions of other groups |
Price elasticity of demand |
Price elasticity of supply |
Perfect competition |
Monopolistic competition |
Oligopoly |
Monopoly |
Market structure and efficiency |
Monopoly vs monopsony power |
Public goods |
Merit goods |
De-merit goods |
Externalities |
Abuse of market power |
Aysmmetric information |
Externalities in production |
Externalities in consumption |
Macroeconomic activity |
Aggregate demand and supply |
Five sector model of economy |
Measurement of economic activity |
Non-market activity |
The business cycle |
Goal of strong and sustainable economic growth |
AD and AS diagrams |
Measuring economic growth |
Economically sustainable development |
Trade-off betwen economic growth and sustainability |
Alternative measures of living standards |
Why inflation is bad |
Why the RBA targets 2-3% |
Measurement of inflation |
Deflation versus disinflation |
Inflationary expectations |
Headline vs underlying |
The Phillips Curve |
Benefits vs costs of full employment |
Measurement of unemployment |
Hidden unemployment |
Underemployment & underutilisation rate |
Unemployment and participation rates |
Is the CAD a problem? |
The exchange rate |
International investment position |
Free trade vs protection |
Problems with protection |
The 'equity goal' |
Measurement of income distribution |
Absolute vs relative poverty |
Equity vs efficiency trade-off |
Costs and benefits of inequality |
Lorenz curve |
Gini-coefficient |
Henderson Poverty Line |
Cash vs underlying outcomes |
Fiscal outcome |
Medium term fiscal strategy |
BP and economic growth |
BP and low inflation |
BP and full employment |
BP and external stability |
BP and the distribution of income |
Budgetary policy and living standards |
Goals of monetary policy |
Implementing monetary policy |
Monetary policy stance |
The transmission mechanism |
Monetary policy and economic goals |
Monetary policy strengths/weaknesses |
RBA charter |
Role of the underlying inflation |
Monetary policy tightening |
Monetary policy loosening |
How other interest rates change |
Pre-emptive decision making |
'Open mouth operations' |
Exchange rate intervention |
Expansionary monetary policy |
Monetary policy neutrality |
Restrictive monetary policy |
MP to achieve low inflation |
MP to stimulate growth and jobs |
Productivity vs efficiency |
Productivity and international competitiveness |
Labour Market Reform |
Trade Liberalisation |
MRPs and internal stability |
MRPs and external stability |
MRPs and equity in the distribution of income |
MRPs and living standards |
The benefit of a flexible labour market |
immigration policy & the three Ps |
Immigration and labour markets |
Immigration and Aggregate Supply |
Immigration and the government's economic goals |
Immigration and living standards |
EMAs and section 457 visas |
Emissions Trading Scheme |
Carbon tax |
ETS vs carbon tax |
Direct action |
Strong and sustainable growth |
Low inflation |
Full employment |
External stability |
Equity in the distribution of income |
Living standards |
MC Introductory concepts |
SA Introductory concepts |
Miscellaneous |
MC market mechanism |
SA market mechanism 1 |
Miscellaneous |
SA market mechanism 2 |
SA market mechanism 3 |
MC elasticities |
SA elasticities |
Miscellaneous |
MC market structures |
SA market structures |
Miscellaneous |
SA market structures 2 |
MC market failures |
SA market failures 1 |
Miscellaneous |
SA market failures 2 |
MC macro activity/eco growth |
SA macro activity/eco growth1 |
Miscellaneous |
SA macro activity/eco growth2 |
SA macro activity/eco growth3 |
MC low inflation |
SA low inflation1 |
Miscellaneous |
SA low inflation2 |
MC full employment |
SA full employment1 |
Miscellaneous |
SA full employment2 |
MC external stability |
SA external stability1 |
Miscellaneous |
SA external stability2 |
SA external stability3 |
MC equity in distribution of income |
SA equity in distribution of income1 |
Miscellaneous |
SA equity in distribution of income2 |
SA equity in distribution of income3 |
Miscellaneous |
MC fiscal/budgetary policy |
SA fiscal/budgetary policy 1 |
Miscellaneous |
SA fiscal/budgetary policy 2 |
SA fiscal/budgetary policy 3 |
SA fiscal/budgetary policy 4 |
SA fiscal/budgetary policy 5 |
MC monetary policy |
SA monetary policy 1 |
Miscellaneous |
SA monetary policy 2 |
SA monetary policy 3 |
MC Aggregate supply policies |
SA Aggregate supply policies 1 |
Miscellaneous |
SA Aggregate supply policies 2 |
SA Aggregate supply policies 3 |
SA Aggregate supply policies 4 |
SA Aggregate supply policies 5 |
MC Policy mix |
SA Policy mix |
Miscellaneous |
MC course revision |
SA course revision 1 |
Miscellaneous |
SA course revision 2 |
Contemporary activities 2016 A |
Contemporary activities 2016 B |
Contemporary activities 2015 A |
Contemporary activities 2015 B |
Videos |
Diagrams used in activities |
Google community eco teachers |
Misc videos |
Misc videos |
The Checkout season 1 |
The Checkout season 2 |
The Checkout miscellaneous |
The Corporation |
EconPop |
Freakonomics |
PPC1 |
PPC2 |
PPC3 |