1.1 Basic concepts notes

1. 1.1.1Micro and macroeconomics; capitalist, socialist and mixed economies

   Microeconomics studies individual decision-makers and markets, macroeconomics studies the economy as a whole, and an economic system decides who owns resources and who answers the three central questions of production.

   Advanced · 6 min · Read here
2. 1.1.2Sectors of the economy: primary, secondary and tertiary; organised and unorganised

   Economic activity is grouped into primary, secondary and tertiary sectors by what is produced, and into organised and unorganised sectors by how enterprises are run and regulated.

   Advanced · 7 min · Read here
3. 1.1.3Goods, capital and the circular flow: final and intermediate goods, stocks and flows, leakages and injections

   National income accounting separates final goods from intermediate goods, stocks from flows, and tracks how income circulates between households, firms, government and the rest of the world, with savings, taxes and imports leaking out and investment, government spending and exports flowing in.

   Advanced · 7 min · Read here
4. 1.1.4Keynesian income determination: consumption function, multiplier and the paradox of thrift

   In the simple Keynesian model, with prices fixed and spare capacity, output is decided by aggregate demand, and a change in autonomous spending changes income by a multiple.

   Advanced · 10 min · Read here

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