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Mene b haalim k lectures or quiz videos e dekhi thin

Kafi questions graphs k slopes k shifting k bare mein the

Paper was conceptual. Zyada portion last k 5 ya 7 lectures se aya hua tha. Graphs k baray mian kafi zyada questions thay.

90 MCQS thy 30% past file me se thy jis file me 200 MCQS thy us me se or haleem insights ki video quiz 4 Wali me thy or
baki handout se or forex trading k 3 MCQS ay hwy thy

Overall easy paper nai tha. Means jis ne handouts se parha ho ga woh easy rahay ga.

1. Exogenous growth, endogenous growth

2. Price discrimination
3. Monopoly
4. Oligopoly
5. Classical vs. Keynesian views
6. IS-LM curve
7. Monetarist neo classical RBC school of thoughts (all school of thoughts in economics)
8. Formula of Avg. Propensity to consume
9. Types of unemployment
10. Import exports relation
11. Exchange rates high / low /and its slopes
12. Inflation and dissolutions
13. Economic policies

AI-Generated Information for topics mentioned above

 1. Exogenous Growth
Definition: Exogenous growth refers to economic growth that is driven by external factors outside the economic system
itself.

Explanation: Imagine the economy as a plant. In exogenous growth, the plant's growth depends on factors like sunlight
and rain (external factors) rather than the plant's internal processes. In economic terms, this means growth is attributed
to factors outside the production process or the decisions of economic agents.

Key features:

 Growth is determined by factors external to the model

 Technological progress is assumed to occur independently of economic decisions

 Savings rate is often considered a key driver of growth

 Formula:

2. Endogenous Growth
Definition: Endogenous growth theory proposes that economic growth is primarily the result of internal forces within
the economic system, particularly investments in human capital, innovation, and knowledge.

Simple explanation: Using our plant analogy, endogenous growth is like the plant growing because of its internal
processes, such as photosynthesis. In economic terms, this means growth comes from factors within the economic
system, like education, research and development, and innovation.
Key features:

 Growth is explained by factors within the model

 Technological progress is a result of economic activities

 Emphasis on human capital and knowledge spillovers

Formula:

3. Price Discrimination
Definition: Price discrimination is a pricing strategy where a company sells the same product or service at different
prices to different customers or market segments.

Simple explanation: Imagine a movie theater charging different prices for the same movie: lower prices for students and
seniors, and higher prices for adults. This is price discrimination - selling the same product at different prices to
maximize profits by capturing more consumer surplus.

Types of price discrimination:

1. First-degree: Charging each customer their maximum willingness/ability to pay.

2. Second-degree: Offering different prices based on different quantity purchased.

 3. Third-degree: Charging different prices to different market segments.

Formula: The profit-maximizing condition for a price-discriminating monopolist is:

MR1 = MR2 = ... = MRn = MC

Where:
MRi = Marginal Revenue in market segment i
MC = Marginal Cost

4. Monopoly
Definition: A monopoly is a market structure where a single seller has complete control over the supply of a good or
service with no close substitutes.

Simple explanation: Imagine there's only one company selling smartphones in the entire world. This company would
have a monopoly on smartphones. They could set prices as they wish, control supply, and wouldn't face competition.

Key features:

 Single seller

 No close substitutes

 High barriers to entry

 Price maker (can influence market price)

Formula:

5. Oligopoly
Definition: An oligopoly is a market structure characterized by a small number of large firms that dominate the industry.

Simple explanation: Think of the smartphone market - it's dominated by a few big players like Apple, Samsung, and
Google. These companies are aware of each other's actions and their decisions significantly influence the market.

Key features:

 Few large firms

 High barriers to entry

 Interdependence among firms

  Strategic decision-making

Models:

 Cournot model: Firms compete on quantity

 Bertrand model: Firms compete on price

 Stackelberg model: Sequential decision-making with a leader and follower

6. Classical vs. Keynesian Views

Classical View:

 Emphasizes supply-side factors and long-run economic growth

 Believes in the self-regulating nature of markets (invisible hand)

 Advocates for minimal government intervention

 Assumes full employment in the long run

 Key equation: Say's Law - "Supply creates its own demand"

Keynesian View:

 Focuses on demand-side factors and short-run economic fluctuations

 Believes markets can fail to clear, leading to unemployment

 Advocates for active government intervention to stabilize the economy

 Emphasizes the role of aggregate demand in determining output

 Key equation: Y = C + I + G + (X - M) Where Y is output, C is consumption, I is investment, G is government

spending, X is exports, and M is imports

7. IS-LM Curve
Definition: The IS-LM model is a macroeconomic tool that shows the relationship between interest rates and real output
in the goods and services market (IS) and the money market (LM).

Simple explanation: Imagine two curves on a graph. The IS curve shows combinations of interest rates and output
where investment equals saving. The LM curve shows combinations where the demand for money equals the supply.
Where these curves intersect determines the equilibrium interest rate and output in an economy.

IS Curve (Investment-Saving):

 Represents the goods market

 Downward sloping (higher interest rates lead to lower output)

 Equation: Y = C(Y-T) + I(r) + G Where Y is output, C is consumption, T is taxes, I is investment, r is the interest
rate, and G is government spending

LM Curve (Liquidity Preference-Money supply):

 Represents the money market

  Upward sloping (higher output leads to higher interest rates)

 Equation: M/P = L(r, Y) Where M is the money supply, P is the price level, L is the demand for money, r is the
interest rate, and Y is output

8. Schools of Thought in Economics

a) Monetarist School:

 Emphasizes the importance of money supply in determining economic outcomes

 Believes inflation is primarily a monetary phenomenon

 Key figure: Milton Friedman

 Key equation: 𝐌𝐕 = 𝐏𝐘
(Quantity Theory of Money)
Where
M is money supply,
V is velocity of money,
P is price level, and
Y is real output

b) Neoclassical School:

 Focuses on supply-side factors and microeconomic foundations

 Assumes rational expectations and efficient markets

 Emphasizes long-run economic growth and the role of technology

c) Real Business Cycle (RBC) Theory:

 A branch of neoclassical economics

 Attributes economic fluctuations to real shocks (e.g., technological changes) rather than monetary factors

 Assumes markets always clear and there is no involuntary unemployment

d) New Keynesian School:

 Incorporates Keynesian ideas into models with micro foundations

 Focuses on market imperfections and sticky prices/wages

 Supports the idea that monetary policy can affect real economic outcomes in the short run

e) Austrian School:

 Emphasizes individual choice, subjective value theory, and the role of entrepreneurship

 Critical of government intervention and central banking

 Key figures: Friedrich Hayek, Ludwig von Mises

f) Behavioral Economics:

 Incorporates insights from psychology into economic analysis

  Challenges the assumption of perfect rationality in decision-making

 Key figures: Daniel Kahneman, Richard Thiler

9. Average Propensity to Consume (APC)

Definition: APC is the ratio of total consumption to total income.

Formula:

C
APC = Y
Where:
C = Total consumption
Y = Total income

Simple explanation: Imagine you earn $1000 and spend $800. Your APC would be 800/1000 = 0.8 or 80%. This means
you consume 80% of your income.

Related concept: Marginal Propensity to Consume (MPC) = ΔC / ΔY (change in consumption divided by change in
income)

10. Types of Unemployment

a) Frictional Unemployment:

 Short-term unemployment due to the time it takes to match job seekers with available jobs

 Considered natural and always present in a dynamic economy

b) Structural Unemployment:

 Results from a mismatch between workers' skills and job requirements

 Often caused by technological changes or shifts in the economy

c) Cyclical Unemployment:

 Occurs during economic downturns when overall demand for goods and services decreases

 Directly related to the business cycle

d) Seasonal Unemployment:

 Occurs in industries with seasonal fluctuations in demand (e.g., tourism, agriculture)

e) Classical Unemployment:

 Caused by wages being set above the equilibrium level (e.g., due to minimum wage laws)

11. Import-Export Relations

Definition: The relationship between a country's imports and exports, often expressed through the balance of trade.

Key concepts:
  Trade Balance = Value of Exports - Value of Imports

 Trade Surplus: Exports > Imports

 Trade Deficit: Imports > Exports

Factors affecting import-export relations:

 Exchange rates

 Comparative advantage

 Trade policies (tariffs, quotas)

 Economic growth (domestic and foreign)

 Consumer preferences

12. Exchange Rates

Definition: The price of one currency in terms of another currency.

Types:

 Fixed exchange rate: Set by the government

 Floating exchange rate: Determined by market forces

Slopes in exchange rate graphs:

 Upward slope: Currency appreciation (strengthening)

 Downward slope: Currency depreciation (weakening)

Factors affecting exchange rates:

 Interest rates

 Inflation rates

 Political stability

 Economic performance

 Speculation

13. Inflation and Disinflation

Inflation: A general increase in prices and fall in the purchasing value of money over time.

Types:

 Demand-pull inflation: Caused by excess demand

 Cost-push inflation: Caused by rising production costs

Measurement: Consumer Price Index (CPI), Producer Price Index (PPI)

Disinflation: A decrease in the rate of inflation (prices still rising, but at a slower rate)

Causes:

 Contractionary monetary policy

 Increased productivity

 Decreased aggregate demand

14. Economic Policies

a) Fiscal Policy:

 Government's use of taxation and spending to influence the economy

 Expansionary: Increase spending or reduce taxes to stimulate growth

 Contractionary: Decrease spending or increase taxes to slow down the economy

b) Monetary Policy:

 Central bank's actions to control money supply and interest rates

 Tools: Open market operations, reserve requirements, discount rate

 Expansionary: Lower interest rates to stimulate borrowing and spending

 Contractionary: Raise interest rates to slow down the economy and combat inflation

c) Supply-Side Policies:

 Aimed at increasing the productive capacity of the economy

 Examples: Deregulation, tax cuts, improving education and training

d) Trade Policies:

 Policies affecting international trade

 Examples: Tariffs, quotas, subsidies, free trade agreements

e) Income Policies:

 Aimed at controlling wage and price inflation

 Examples: Wage and price controls, incomes policies

f) Structural Policies:

 Long-term policies aimed at improving the fundamental structure of the economy

 Examples: Labor market reforms, competition policy, innovation policy

Examples
Exogenous Growth: Example: A country's economy grows due to the discovery of new oil reserves.

Endogenous Growth: Example: A country's economy grows because of increased investment in education and
research.

Price Discrimination: Example: Airlines charging different prices for the same flight based on when tickets are
purchased.

Monopoly: Example: A single company providing all electricity in a city.

Oligopoly: Example: The smartphone market dominated by Apple, Samsung, and Google.

Classical vs. Keynesian Views: Classical example: Believing that unemployment will naturally resolve itself without
government intervention. Keynesian example: Government increasing spending during a recession to boost the
economy.

IS-LM Curve: Example: Using the model to predict how a tax cut might affect interest rates and GDP.

Average Propensity to Consume: Example: If you earn $1000 and spend $700, your APC is 0.7 or 70%.

Types of Unemployment: Frictional: A college graduate taking a few months to find their first job. Structural: Coal
miners losing jobs due to a shift towards renewable energy. Cyclical: Retail workers laid off during an economic
downturn.

Import-Export Relations: Example: A country exporting more cars than it imports, resulting in a trade surplus in the
automotive sector.

Exchange Rates: Example: $1 USD being worth 0.85 EUR.

Inflation: Example: The price of a loaf of bread increasing from $2 to $2.10 over a year.

Disinflation: Example: Inflation rate decreasing from 5% to 3% year-over-year.

Economic Policies: Fiscal Policy: Government cutting taxes to stimulate consumer spending. Monetary Policy: Central
bank lowering interest rates to encourage borrowing and investment.