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Econ Study Guide Hans Rosling vs Richard Wilkinson Rosling Life expectancy Around the 1800s all countries were sick and poor with an average life expectancy of below 40 years old Industrial revolution increased wealth and life expectancy in western countries Countries facing colonization had little to no growth With increase in wealth came the increase in life expectancy However there are still great differences in different parts of each country same point as Wilkinson Wilkinson Life expectancy At a certain point income has no effect on life expectancy Within our societies there is a prominent relationship between life expectancy and wealth The gap between the richest and the poorest show the apparent social issues literacy infant mortality imprisonment The average wellbeing is not dependent on income anymore Similarities Both agree that increasing income does not always result in a proportionate increase in life expectancy Cyclical vs Secular Trends in Time Series Data Cyclical Trends exhibit behavior that is apparently linked to seasonal or business cycle phenomena Peak recession trough recovery expansion where a business opportunity generates new companies or products that reap good pro ts those pro ts bring in copy cat competitors that kill off the pro ts a bunch of the companies then go under consequently reducing supply and then the cycle repeats unemployment caused by macroeconomic conditions business cycle Boom jobs created recession laid off Secular trends transcend cyclical patterns likely to continue moving in the same general direction for the foreseeable future Sources of Inflation Aggregate demand demand for all goods a measurement of the total amount of demand for all finished goods and services produced in an economy Aggregate supply Supply for all goods in the economy the total supply of goods and services produced within an economy at a given overall price in a given period Demand pull Demand increase GPD increase higher prices ex Increase in spending causes the demand curve to shift outwards Cost push Supply decrease GDP decrease higher prices An increase in the cost of production Increase in oil prices more expensive to produce transport Redistributive Consequences of Inflation Increase in prices larger inflation but it s an average Price effects a concept that looks at the effect of market prices on consumer demand People who tend to buy goods and services that are increasing in price the fastest end up with fewer goods and service they re hurt ex a decrease in the purchase of goods and services preferred by people due to an increase in their price Income effects the change in the consumption of goods based on income People whose nominal income rises more slowly than inflation end up with fewer goods and services because they can t afford it Drug companies minimum wage Wealth effects people spend more as the value of their assets rise If asset value increases higher than inflation rate end up with higher wealth Hurts lenders if inflation is higher than anticipated Deflation devastated debtors Debt borrowers benefit loaners lose

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UMass Amherst ECON 104 - Econ Study Guide

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