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Transcript
1 Form 7 Economics Syllabus Introduction and Measurement: Measuring GNP, Inflation & unemploy‘t Introduction The Aggregate Output Two-sector Circular Flow Model Items Excluded from N.I Accounting Output Approach Expenditure Approach Income Approach Merits & Limitations of N.I. Statistics Measuring Inflation Constructing Price Index Consumer Price Index Implicit GNP deflator Measuring Unemployment Method of Analysis Economic Theory Exogenous and Endogenous Variables Ceteris Paribus / Expansion of the model Properties of a Linear Function Concept of Equilibrium Identities and Equations Comparative Statics Simple Keynesian Model: National Income Determination 2-sector N.I Model Aggregate Demand & Supply National Income Identities Equilibrium Income Consumption Function Investment Function Aggregate Demand Function Output-Expenditure Approach to income determination Injection & Withdrawal Approach The equilibrium Condition Revisited Concluding Remarks on the Model Paradox of Thrift Flow Chart in the Two-sector Model 3-sector N.I. Model Introducing the Government Sector Government Expenditure Function Consumption and Tax Functions AD Function Income Determination : Output-Exp. App. Simple Algebra of Income Determination factors affecting equilibrium Income Expenditure and Tax Multipliers Injection & Withdrawal Approach Concluding Remark on the 3-sector model Policy implications Fiscal Policy & Gov‘t Budget Recessionary Gap & Fiscal Policy 2 Financing a Deficit Budget Automatic Built-in Stabilizers 4-sector Model Import and Export Functions AD Function Equilibrium Income & the multiplier Foreign Sector & Income Determination Injector and Withdrawal Approach Summary IS-LM Model Short run IS-LM model Interest-induced Investment Function AD function & equilibrium Income Deriving the IS curve Alternative method of deriving IS fn. Simple algebra of the IS curve Slope of the IS function Shift of the IS curve Changes in lump-sum tax Versus Changes in autonomous spending Asset market Demand for money Derivation of the LM function LM curve Alternative method of deriving LM fn. Simple algebra of the LM curve Slope of the LM curve Movement of the LM curve Interest rate and the income determination Implication of the IS-LM model Effects of a change in IS Effects of a change in LM Disequilibrium in the Goods market Disequilibrium in the Money market Goods mkt. and money mkt. Diseq’m Fiscal and Monetary Policy Fiscal Policy Expansionary & contractionary fiscal policy Crowding-out effect Effectiveness of Fiscal policy Remarks on the Effectiveness of F. policy Monetary policy Expansionary and contractionary monetary policy Effectiveness of monetary policy Concluding remarks on the effectiveness of monetary policy Deflationary & Inflationary Income gap More on the Fiscal policy IS-LM model Vs Simple Keynesian model Income and Interest Rate Determination: The Classical Tradition Basic Framework Employment & real Income determination 3 Interest rate determination Consumption and Investment : A General Analysis Determinants of Consumption Keynesian Theory of Consumption Alternative Theories of Consumption Factors Affecting consumption Determinants of Investment Money: Nature of money and Theories of Money Demand Nature and function of money Characteristics of Good money Evolution of money Money demand Keynesian money demand theory Keynesian liquidity trap analysis Alternative approach of the dd. for money Quantity Theory of Money & Demand for Money - Classical version, Cambridge version - the Cambridge version of QT as a Theory of money demand - The Cambridge k and income velocity of money, V - Limitations of the Theory Portfolio Choice Analysis Money: Money Supply and Monetary Policy in HK Definitions of money supply Determination of money supply - Definitional Identities - Assumptions - Derivation of the Banking Multiplier An illustration of the multiplying effects - the simple banking multiplier - Limitations of the model - Applications of the banking multiplier Factors affecting money supply Monetary policy revisited Monetary policy in HK Inflation: Causes and Effects Introduction The nature of inflation Causes of inflation - Inflation as a monetary phenomenon - Non-monetary causes of inflation Redistribution effects of inflation Real costs of inflation Inflationary expectation & interest rates Money supply & interest rate Ways to deal with inflation Theory of unemployment Introduction The Natural Rate Hypothesis Types of unemployment Determinants of the natural rate 4 measures to reduce the natural rate Search Theory of unemployment Trade-off between unemployment & Inflation: Phillips Curve Inflationary expectations and the trade-off Movements of the Phillips Curve Keynesian Involuntary unemployment Cost of unemployment - is it wasteful? Cures to unemployment International Trade: Theory of Comparative Advantage Production & Consumption Possibilities under Autarkt Marginal rate of transformation Autarky’s optimum, domestic price ratio An open economy with free trade A numerical model of absolute advantage An introduction to the trade models on comparative advantage Constant cost model Terms of trade Graphical illustration on the constant cost trade model Increasing cost model Other gains from free trade Trade Restriction Arguments for Protectionism Forms of trade restriction Graphical analysis of import tariffs Graphical analysis of import quotas Tariffs Vs Quotas Balance of Payments Accounting The Current Account Capital Account The Balance of Payments Accounts Balance of Payments Surpluses and Deficits Exchange Rate Systems Flexible Exchange Rate System Exchange Rate and the Balance of Payments Marshall-Lerner Condition Factors Affecting the exchange rate Fixed exchange rate system Fixed exchange rate and the BOP Ways to deal with the BOP Disequilibrium - Automatic mechanisms - Discretionary policies Linked Exchange Rate System in HK - Operation of the Linked Exchange rate system - Difference between the Linked rate and the pegged rate - The linked rate and speculative activities Linked exchange rate system & the BOP - The market exchange rate of the HK$ Fixed Vs Flexible exchange rate system