Economics

Résumé

Economics covers microeconomics, macroeconomics, and international economics. Microeconomics examines demand and supply analysis for consumers and firms, including the determinants of demand and supply, market equilibrium, consumer surplus, producer surplus, and the effects of price controls and taxes. Elasticities measure responsiveness: own-price, income, and cross-price elasticity of demand. The theory of the firm distinguishes total, average, and marginal revenue and cost, economies and diseconomies of scale, and profit maximization where marginal revenue equals marginal cost. Market structures range from perfect competition through monopolistic competition and oligopoly to monopoly, each with different pricing power, concentration, and long-run outcomes. Macroeconomics studies aggregate output and income measured by GDP under the expenditure and income approaches, aggregate demand and supply, the business cycle, unemployment, and inflation (including the CPI and the distinction between cost-push and demand-pull inflation). Monetary policy works through the central bank, money supply, interest rates, and the money multiplier, while fiscal policy uses government spending and taxation; both have limitations and lags. International trade theory addresses comparative and absolute advantage, gains from trade, trade restrictions (tariffs, quotas, subsidies), and the balance of payments. Currency exchange rates are analyzed through spot and forward quotes, cross rates, bid-ask spreads, and parity conditions such as covered and uncovered interest rate parity and purchasing power parity. Exchange rate regimes and the effects of capital flows and the current account complete the topic.