Week 1 & 2
Private property, markets and firms
What are the components of a game?
Players, actions, information, payoffs and rules.
Define pareto efficiency
An allocation where no one can be made better off, without making someone else worse off
What does the labour force consist of?
Number of people who are employed + unemployed
Risk that credit givens as loans will not be repaid
(Tamar is running away w the money)
What does intergenerational inequality refer to?
Inequality based on your starting point (ex. inheritence, nepo babys)
Define a matching market
A market where people care whom they are matched to
What is a procedural judgement of fairness?
What are the 3 ways of measuring GDP?
1. As a sum of production (value added)
2. A sum of all incomes received
3. A sum of spendings
Through what process do commercial banks 'make' money'?
Through maturity transformation; borrowing money short term and lending it out long term
What are earnings?
Incomes from labor (wages/salaries/self-employment)
A nash equilibrium occurs when everyone is playing their best response to the strategies of everyone else
What are the three types of costs created? (Marginal ... cost)
1. Marginal private cost
2. Marginal external cost
3. Marginal social cost
What is not included in Government spending?
Transfers like benefits/pensions are NOT included
An accepted medium of exchange consisting of bank notes and deposits, or anything else that can be used to purchase goods and services and is accepted as payment because others can use it for the same purpose
What are the 4 components of a good model?
A good model is clear, useful, improves communication and predicts accurately
What are strategic complements (DEFINITION)
The more A is performed, the greather the benefits from performing B and vise versa
What are the three main causes of a market failure?
1. External effects
2. Public goods
3. Asymmetric information
What is the formula for aggregate demand in an economy?
C + I + G + (X - M)
The lower the reserve rate the ... money banks can make
MORE
What is an 'oppertunity cost'?
The value of the next best alternative that you give up when making a choice
What are the two situations in which there is a nash equilibrium in a matching market?
1. The behaviour is mutually consistent (so 700 apartments = 1800 seekers)
2. At the origin (0=0) (crazy concept)
What is a Pigouvian tax?
Tax equal to the external costs
Was there high/low inequality during the great moderation?
high
What happens when the housing bubble pops?
crash :((