Increases in prices not always cause inflation

The Phillips curve represents the relationship between the rate of inflation and the unemployment rate.
Inflation: a sustained rise in prices level.There are two types of inflation.

• Cost push inflation which is occurred when increases in the price level caused by increases in the costs of production.
• Demand pull infaltion which is occurred when increases in the price level caused by increases in aggrgate demand.

However, i want to emphasis one point that increases in price of goods and services may not cause Cost push inflation ( such as INCOME stay the same). It is because when there is an increases in certain products, when you purchases it, you will lose your ability to purchases another product since your income stay the same. Therefore, cost puch inflation will not occurre.

Cost push inflation occurres only when there is a continous rise in the general price levels due to increasing output costs. That`s a high cost of inputs lead to a fall in AS, AD remain consistent.

BUT, why i wrote about the phillips curve ?? i don`t know. T.T

Information of the requirement of university of sydney.

First of all, being an international student. ILs is required, a minimum overall score of 6.5 and each sections should above 6.0
academic requirement of 3 or 4 subjects, minimum grades of A,A,Bs. ( I think it is a pretty high requirement)
Duration of Economic and commerce 3 years; Economic 3 years ; I only list those courses i am interested.

What do company report tell us?

The company report provides an overview of the company, including a description, quick facts, stock activity summary, stock price history, financials, fundamentals, earnings estimates, analyst recommendations and statistics.Since we are studying economics, let`s focous on finance.

In the financial reports , it includes :

• sales,
• profit margin,
• growth rate,
• financial ratios,
• cash flows
• balance sheet. (a statement detailing all assets and liabilities of a business)
• Ten year performance summary

Throught these statements, we can know how is the company performing.

Chapter 5 Economics` volcab

Economic growth : in the short run, an increse in real GDP, in the long run, an increase in productive capacity.
Unemployment : a situation where people are out of work but willing and able to work.
Labour force : people who are employed and unemployed, that`s says people who are economically active.
Economically inactive : people of working age who are neither employed nor unemployed.
Deflation : a sustains falling in price level.
Balance of payment : money come in and going out of a country.
inflation rate : the percentage increase in price level over a time period.
Sustainable economic growth : economic growth that can continue over time without affecting future generations` ability to expand productive capacity.
Trend growth : the expected increas in potential output over time. it is a measure of how fast economic can grow without generating inflation.
Full employment : people who wanting and able to work can find employment at the going wage rate.

Economy is found everywhere

After reading Mica`s post "why". i start to realise that economy is found everywhere. I went to Mc with her, i was also there, when Peter asked her ,

why you does not want to go to starbucks?
and both of us answered, being a student, Mc is better choice since it is cheaper.

i should make a self-examination, being an economic student, i should be sensitive to anything related to economy. My dad told me ,

the earlier you start doing, the earlier success you get.

Come, let`s start it now.

Chapter 4 Economics` vocab

Aggregate demand : total demand of a country`s goods and services at a given price level and in a given time period.

AG = C + I + G + ( X - M )
aggregate demand = consumer expenditure + investment + government spending + ( export - import )

Consumer expenditure : spending by household on consumer products. ( clothing, food..)
investment : spending on capital goods. ( machines , office building..)
government spending : spending by central government and local government on goods and services.

Transfer payments : money transferred from one person or group to another not in return for any good or service.

Job seeker`s allowance : a benefit paid by the government to those unemployed and trying to find a job.

Trade surplus : the value of exports exceeding the value of imports.
Trade deficit : the value of imports exceeding the value of exports.

Consumer confidence : how optimistic consumers are about future economic prospects.

Average propensity to consume : the proportion of disposable income spent. It is consumer expenditure over disposable income.

Inflation : a sustained rise in the price level.

Saving : real disposable income minus spending. (real disposable income is disposable income after inflation.)
Average propensity to save : the proportion of disposable income saved. It is saving divided by disposable income.

Target saver : who save with a target figure in mind.

Dissave : spending more than disposable income.

Capacity utilisation : the extent to which firms are using their capital goods.
Corporation tax : a tax on firm`s profits.
Retained profits : profit kept by firms to finance investment.
Unit cost : average cost per unit of output.

Real GDP : GDP after inflation.
Gross Domestic Product GDP : total output of goods and services produced in an country.

Tariff : tax on imports.

Government bond : a financial asset issued by the centrel or local government means of borrowing money.

Aggregate demand : the total amount that producers in the economy are willing to supply in a given prices level in a given time period.

Privatisation : transfer of assets from the public to private sector.

Macroeconomic equilibrium : a situation when aggregate demand equals aggregate supply and real GDP is not changing.

Circular flow of income : the movement of spending and income throughout the economy.

leakage : withdrawals of possible spending from the circular flow of income.

Injection : addtions of extra spending in the circular flow of income.

Multiplier effect : the process by which any change in component of aggregate demand results a greater final change in real GDP.

Overheating : the growth in aggregate demand outstripping aggregate supply, resulting in inflation.

Output gap : the difference between an economy`s actual and potential real GDP.
A negative / positive output gap occures when potential output is above/below the actual output.
An country with positive output gap usually experience inflation.


I seriously think chapter 4 is more diffcult than the preivous.

How government intervention to correct market failure?

Generally, there are FOUR methods to deal with market failure.



Taxation

• some of the tax revenue is used to finance merit goods and public goods, such as education and health.


• indirect tax is used to discourage production of demerit goods and others services that produce negative externalities. (However, most form of indirect tax tend to be passed on, in full or in part, to consumers.)


• Polluter pays principle. green tax. where the polluter pays explicitly for the pollution caused. (it is hard to measure the exact amount of tax , as it is hard to estimate the cost of negative externality; again, the tax can be shared with consumers; the price elasticity of demand for many demerit good is inelastic; better quality information might be used to further reduce consumption.)

Subsidies

It is used to encourage production and consumption which is particularly relevant in the case of merit goods and products that generate positive externalities. Examples : rural bus subsidies, winter fuel payment for aged 60 and above. education and so on.

Regulation, standards and legal controls

eg, the use of demerit goods : restrictions on the sales of tobacco products and alcohol.

• It plays an important role in reducing many forms of environmental pollution that would otherwise have been unavoidable.

Tradable permits

It is achieving a desired environmental outcome consistent with the country`s maximum level of permitted emissions