PM008 Economics and Finance

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PM008 Economics and Finance

Statistics (Topic 10)

Basic descriptive statistics

Data type

Qualitative VS Quantitative Time series VS Cross sectional

Sampling methods

Statistical sampling

Simple random Stratified Systematic Cluster

Nonstatistical sampling

Convenience Judgement Ratio

Population VS Sample

Data collection method

Data collection issues

Experiments; Telephone surveys; Mail questionnaires; Written surveys; Direct observation; Personal interview;Focus groups; Secondary data;

Corporate Finance (Topic 7 - 9)

Risk Management (Topic 9)

Forward contracts Money market Future Option

Risk and Return (Topic 8)

Capital Asset Pricing Model (CAPM)

Investor attitudes to risk

Rule: min risk & max return

Calculation of risk and return

Investment Appraisal (Topic 7)

Payback period ROCE NPV IRR

Economics (Topic 1 - 6)

Macroeconomics (Topic 4 - 6)

Banking, money and interest rate (Topic 6)

impact of a change in the money supply on national income

the supply and demand of money

the financial system

the functions of money

Inflation and unemployment (Topic 5)

Inflation

Demand side VS Supply side policies

the Phillips curves

Quantity theory of money (MV=PY)

Demand pull VS Cost push

Unemployment

costs of unemployment

Equilibrium unemployment

Seasonal unemployment

Structural unemployment

Frictional (search) unemployment

Disequilibrium unemployment

Real-wage (classical unemployment) Demand-deficient (cyclical) unemployment Unemployment arising from a growth in the labour supply

National economy (Topic 4)

Economic Growth

Long-term growth

Short-term growth

Business cycle (upturn/expansion/peaking out/recession)

Actual growth vs potential economic growth

Measuring national income

GDP; GNY/GNP; NNY

the product method the income method the expenditure method

Circular flow of income

W & J

The scope of macroeconomics

Economic growth -> high and stable Unemployment -> low Inflation -> low Balance of payments -> balanced Exchange rate -> min fluctuation Financial system -> stable

Microeconomics (Topic 1B - 3)

Market structure (Topic 3)

price discrimination

Features of the four market structures

Markets in action (Elasticity) (Topic 2)

Calculation, interpretation/application

PES=(%∆𝑄_s)/(%∆𝑃)

CED (XED)=(%∆𝑄_a)/(%∆𝑃_b)

=0 (or close to 0): no significant relationship >0: substitutes <0: compliments

YED=(%∆𝑄_𝑑)/(%∆Y)

+: normal goods (luxury goods (>1) & necessities (<1)) -: inferior goods

PED=(%∆𝑄_𝑑)/(%∆𝑃)

Elastic product: P rises -> TE falls; P falls -> TE rises Inelastic product: P rises -> TE rises; P falls -> TE falls

PED>1: relatively elastic (flatter demand curve) PED<1: relatively inelastic (steeper demand curve) PED=1: unitary elastic PED=0: perfectly inelastic (vertical demand curve) PED infinity: perfectly elastic (horizontal demand curve)

Demand and supply (Topic 1B)

Price control

Maximum price (price ceiling)

Minimum price (price floor)

Price and output determination (D=S)

Changes of supply/demand

Non-price factors: shift (increase/decrease)

Price factors: move along (expansion/contraction)

Demand curve & supply curve

Basic Economic Concepts (Topic 1A)

Economic systems

Mixed economies

Command economies

Free market economies

Macroeconomics VS Microeconomics

PPF; Opportunity costs

Central economic problem: scarcity (limited resources and unlimited wants)