以前学过的那门课，总觉得已经包含了宏观和微观经济的东西了呢。但是它不属于Social and behavioral science吧。所以这门初级的课程还是得学，真是遗憾。然而这么初级的东西，上个学期竟然学得力不从心。这个坑还是不得不挖了，一来是保证学习的质量，二来是防止学完后过半年就忘个一干二净，需要重温时却无从下手。至少，我自己写出来的东西，自己是很愿意看的。
课程习自Thinkwell。一共5个单元，每单元有若干章节，每一章节还有三五个小节。课程的信息量可能会很庞大，尽量挑重点来总结吧。

★ Introduction to Economic Thinking
　● The Basics of Economics
Definition of economics:
·Economics is the study of rational choice under conditions of scarcity.
What is opportunity cost:
·Opportunity cost is the best alternative that you give up when you make a choice.
4 kinds of statements:
Positive Statement concerns what "is", "was", or "will be", and contains no indication of approval or disapproval (what should be).

1.4
A producer has an absolute advantage in the production of a good or service when that
producer can produce the service using fewer resources than other producers.
A producer has a comparative advantage in the production of a good or service when
that producer can produce the good or service with a lower opportunity cost.I

2.1
Substitudtes Goods:
One of them can be purchased instead of another; so the demand canshift from one to the other. EXAMPLE: vegetable oil & peanut oil
Complements Goods:
The two of them must be purchased together for usage; the demand rise and fall together. EXAMPLE: Shoes & socksI

"Demand" and "Quantity Demanded" are two very different concepts.
Demand refers to the overall situation/formula of the market, while Quantity Demanded refers to onesingle point on the demand curve, which is the demand at a specific price.
Determinetes of demand include:???? it will change only when these factors alter
Normal Goods: Income+ Quantity Demanded+
Example: Go watch a film in the movie theatre
Inferior Goods: Income+ Quantity Demanded-
Example: Buy a pirated copy of the film

3.1
What is "real GDP" and "nominal GDP" ?
Nominal GDP is simply calculated by total quantity × price.
Real GDP × Deflator = Nominal GDP.
Deflator is a number in the form of percentage and above 100(otherwise would be inflator I guess).

▇ 3.2.1 The Expenditure Approach (of calculating GDP)
By adding up all spendings from different catagories.
GDP(Y) =
Household - Comsumption (C)
+
Bussiness, Firms - Investment (I)
+
Purchases by Government (G)
+
Net Export (NX)
// The letter Y is like in a math function.
▇ 3.2.2 The Income Approach (of calculating GDP
By adding up all incomes from different catagories. But let's analyse it backward
· Y - [depreciated capital] = Net Domestic Product
· NDP - [foriegn factors] - [indirect bussiness taxes] = National Income
· NI - [what you pay to government] + [what government pays you] = Personal Income
· PI - [tax] = Disposable Income
// Money that government pays you, such as tax returns and welfares are viewed as 【TRANSFER PAYMENTS】 and are not counted in the GDP because they do not represent production of goods and services.
Wonder why?
1. You earn the money from production 　　　　← ALREADY counted here
2. Government collects the money from you
3. Government gives money back to you

▇ 3.3.1 What on earth is CPI?
[ Consumer Price Index ] is a monthly measure of the prices of G&S purchased by a typical household compared to that of the previous month(might not be monthly, not sure).
Very widely used:
· Wage contract
· Cost of living adjustments
· Inflation-indexed bonds
· Real interest rate
[Real Interest Rate] = [Nominal Interest Rate] - [Inflation Rate]
Another name for RIR is [ Real Rate of Returns ]!
PPI would be more about raw materials. It foreshadows the CPI.
▇ 3.3.2 GDP Deflator and CPI
The GDP Deflator consider all final G&S produced in the economy.
+ only those produced domestically (that's why it's GDP)
+ use current year quantity
The CPI is measured from G&S that a typical household will buy.
+ include imported ones.
+ use fixed quantity from base year
▇ 3.3.3 GDP Deflator and CPI - Comparing
CPI should be used for calculating Cost of Living adjustment.
GDP Deflator should be used to measure the Rate of Inflation.
Why CPI is not suited:
① Not comprehensive
② Ignore substitution goods
③ Exclude new products
④ Exclude quality changes
⑤ Exclude shopping patterns
Conclusion: It would overstate the RoI for 1%-1.5%
// It seems the CPI completely ignore all the demand and supply rules from chapter II, lmao.

▇ 3.4.1 Bussiness Cycles
ª The business cycle describes fluctuations of economic activities over a
period of time.
ª An expansion is a period when real GDP is rising more rapidly than the
trend. Significant or prolonged expansions are called booms.
ª Contractions are periods when the real GDP grows slower than the trend.
Significant or prolonged contractions are called recessions. Depressions
are especially severe recessions.
ª Government policy seeks to moderate the business cycle.
▇ 3.4.2 Explanations for Bussiness Cycles
Karl Marx:
Class struggle, excess supply (we are really familar with these).
Solution: more planning
Joseph Schumpeter:
New technology replacing old ones, causing chaos.
John Maynard Keynes:
People save too much when they do not feel safe. There is a trade of between inflation and unemployment. The economy is driven by demand. When the demand from household is not big enough, the government should step in and spends. (Also sounds familar!)
Solution: Government spending = Household saving
New Classical:
It's a natural phenomenon by Law of D/S. Just keep your hands off and watch it happen.
Real Bussiness Cycle Theory:
The economy is driven by supply of real factors - natural resources and technologies. Like oil prices. A tiny change in these things would cause a shockwave in the cycle, like a peddle ripple tinto the water.
Monetairst:
Fluctuation happens because the money supply is actively being controlled by the government.
Solution: Don't use monetary policys to regulate the bussiness cycle. (WTF, who print the money then? I failed to understand this branch.)
CONCLUSION: All of these play some roles, more or less (how bloody typical).

▇ 3.7 Unemployment
1. Minimum Wage
May hurt unskilled workers as firms dont want to hire them as wage grows.
2. Labor Union
Enpower workers to bargain about wages; may still hurt unskilled workers. May hurt firms to force them to operate inefficiently.
[ Right-To-Work Laws ] protect unskilled workers, by making it illegal for an employer to require union membership as a condition of employment.
3. Efficiency Wage
A firm may choose to pay wages higher than equilibrium, in order to:
- Motivate workers ("I'd better not lose this amazing job")
- Increase workers' productivity("let's work harder to make the boss happy")
- Attract skilled workers, prevent adverse problem
(Adverse Problem is when several people work as a team, you pay the same wage according to their average productivity. Consequently the best guy quit, he can earn more elsewhere.)
- Decrease turnovers.
4. Unemployment Insurance
- Unemployment insurance is paid to financially compensate those
individuals who are unemployed.
- Receiving unemployment insurance may delay the job search and promote
moral hazard. Moral hazard is a risk to an insurance institution resulting
from uncertainty about the honesty of the insured.
- Creating a two-tiered system to distinguish between long-term and shortterm unemployed and insuring only those actively searching for work would aid in providing unemployment protection without moral hazard.

▇ 4.1.1
M1:Narrowly defined money: coins and stuff
M2:include saving accounts and stuff
▇ 4.1.2
3 motives for holding money:
① Transaction motive (for buying), with 3 factors:
- real income
- price level
- interest rate
② Precautionary motive, reserving for emergency things
③ Speculative motive, based on your guessing of trends of interest rate, influencing bonds, securities
Demand curve of these:
Interest rate↑ Q Money demanded ↓
Price level↑ D↑ you need more money to buy stuff
Real Income↑ D↑ you want to do more shopping
▇ 4.1.3
The government decide the money supply, which would be a vertical line in the demand curve. It thus decide the interest rate.
People drive the bond interest rate higher with more money at hand

▇ 5.1.1 Deriving the Aggregate Demand Curve
▲
Nominal Economy: measured with $$$
Real Economy: measured with good & services
<The Circular Flow Model> illustrate real flow of good & services //price paribus
▲When price rises:
Household: spend-, save+
Bussinesses: D($)+, Interest+, spending-
Foreigers: Invest-
▲Y = C + G + I + NX
Aggregate Demand curve:╰
Equilibrium: Aggregate Expenditure = Income
3 things about the curve: C,G,I, all fall as price goes u
FAQ:
Q: why D($)+ interest+? I thought the bank will pay more for people's savings?
A: I don't know for sure, but apparantly loan matters much more!
▇ 5.1.2 Movement along the Aggregate Demand Curve
P
| 　\　　　AD curve
|　　＼__
|_________ Y
▲Still, 3 ways of this happening:
C
　Price+
　real wealth-, customer spending-, output
I
　Price+
　D($)+, IR+(firms borrow less $), investment spending-, bussiness output
NE
　Price+
　foreign demand-, foreign spending-
All leads to Y-
▲Different determinants of demand curve in macro and micro economics
Micro: Substitution good, income
Macro: Overall relationship between price level and output. //Nothing about OC

▇ 5.1.3 Shifts in Aggregate Demand
Q: What does it mean when AD shift outwards?
A: The demand for G&S increases at EVERY price level
With price paribus, how would it shift outwards?
① Autunomous spending
- Consumers decide just spend the heck of it
- When firms feels like spending
- When foreigners feels the same way
② Policy related
- Government decides to spend (building roads, etc)
- Lower taxes
- S($)↑ -----> IR↓ -----> firm spending↑
For inward shifting, just reverse all these

☞
Suppose that, as a producer, your production costs have increased at the same rate as your revenue. You can conclude that
Sorry, that's not correct.
You said A:
your profit will increase.
The correct answer is C:
your profit will remain unchanged.
Explanation:
The short-run aggregate demand curve is based on the premise that all prices will not adjust at the same rate or time, leaving room for profit opportunities when prices increase. If production costs change at the same rate as revenue, there is no room for profit.
☞
When a factor, other than the price level, that affects the aggregate quantity supplied changes, we would expect the short-run aggregate supply curve to
Sorry, that's not correct.
You said D:
be unaffected.
The correct answer is A:
shift inward or outward.
Explanation:
When graphing the short-run aggregate supply curve, we plot the aggregate price level on the y-axis and output on the x-axis. So when a factor not represented on the graph changes, the curve will shift either inward or outward.