examen eco

1- Price elasticity demand

Definition

Is when th price of something changes and it variates the quantity of said good sold in the amrket

formula

%quantity changed/price change %

determining factors of PED

luxury or not

availabblitly of close substitutes

cost of changes

price relative to income

brand loyalty

Types of elaticity

PED=0

perfectly inelastic

insulina

1>PED>0

inelastic

gasolina

PED=1

unit elastic

LV

PED>1

elastic

cocacola

PED= infinito

oerfectly elastic

productos iguales

Subtópico

Dyinamic pricing

prices change depending on what demand at the time in a flexible wat

case of uber that des this

definition and objectives of MP

definition

MP actions by the central bank to influenve

main objective

inflation targeting: based on the quantity theory of money

(M x Vt = P x t)

historical context

monetarists

from the 1970s until 2008

instruments of monetary policy

open marjet operations

purchase of securities

rise of money supply as funds move to comertial banks

reserve requirements

reduction inreserve ration

provide banks with more liquidity to extend credit

increase inreserve ration

down liquidity available for credut

discount rate

high

borrowing becomes more expensive

menos money for lending

low

borrowing is cheaper

mas money for leanding

credit rationims

facilitating or limiting acced to credit by specific measurments

moral suasion

the CB uses to invluence financial institutions

persuation

comunication

advice

impact of MP on economic variables

amount of $ / interest rates

open market operations

purachase

expand the Monetary supply

less credit cost

sale

contracts the MS

more credit cost

cash reserve ratio

reductions

more credit availabilitity

less credit cost

increase

less credit availability

more credit costs

discount rate

more

limits fund for lending

leads to high leadinf rates

less

expands funds for lending

leads to low leadinf rates

expectations about montetary variables

instruments are used to shape economic agents' expectations regarding $ trends

tools to affect expectations include

2

persuasion and comunication

advertising

publicizing CB stratefues, goals and decisions

advice

detailed economic and lysis provided by the CB study deparment

1 definition

budget revenue

total de ingresos de un pais

budget spending

lo que gasta un pais

tipos

capital spending

hospitales

current spending

funcionarios

transfer payments

pensiones

budget

budget deficit

spending> revenue

types

revenue deficit

total expenditures> total revenue

fiscal deficit

total expenditures>total revenue - borrowing

primary deficit

fiscal deficit- interest

budget surplus

revenue> spendings

balanced budget

inflows=outflows

reasons for budget deficit

increase in the agregate demand

financial need of the state

debt managment

primary methods to addres deficits

limited monetisation

debt issue

challenges of debt

resource allocation

have to pay the interest of the debt in several years

debt to GDP ratio

Fiscal policy overview

definition

governments budgetary decisions

objectives

increase or defrease agregate demand

redistribute income and wealth

using fiscal policy for economic goal

to foster employment

reduce corporate taxes to boost investment

Increase public spending

provide incentives to rise exports

to confront inflation

rise taces for house holds and buisnesses to crub more explending

down public spenditures

down goverment transfer payments

types of fiscal policy

automatic stabilizer

operates counter-clyclical

expansionary periods

rise of taxes

contractionary periods

rise transfers to families

ex: tasa del paro

discretionary measures

deliberate actions by the goverment to adjust fiscal policy

volume structure and composiotion of public expenditure

type and level of taxes

managing budget deficit or surpluses

basic concepts

inflation

rate of increase in prices over a specific time

deflation

oposite of inflation

Measurments of inflations

consumer price index(CPI)

harmonixed indez of consumer prices (HICP)

GDP deflatior

Core inflation

examples

infaltion

annual price of a loaf of bread

deinflarion

smatphone prices are lowering

cost push inflarion

arises from

wage push

increased labour cost

profit push

businesses raising prices

imported inflation

cost of foreign goods rises

economics policy recommendation

income policies

supply policies

reduce reliance in imports

encurage domestic production

structural inflation

results from long-term structural bottle necks in the economy

insufficient competition

lack of infrastructure

inefective institutions

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