Marziye's notes on Principles Of Economics

Cause of inflation: increase in quantity of cash.

The relationship between income and product elasticity: take museum ticket price! If museum ticket is elastic, you will loose a considerable bunch of the museum income. If not, increasing the ticket price, you earn more money!

Policymakers use taxes to influence the market and increase government revenues.

Rent and wage subsidies increase government spending, and as a result, the government must take more taxes.

The tax makes the buyers pay more for the goods and the sellers get a lower price. The analysis shows that the tax costs for buyers and sellers are more than the tax revenue of the government.

Import tariffs and quotas increase prices, limit trade and create losses due to quotas.

The best policy from the point of view of economic efficiency is trade liberalization without import tariffs or quotas.

GDP measures two things: the total income of people in the economy and the total costs of producing goods and services in the economy. For an economy, total revenue must be equal to total cost.

Real GDP growth is a good indicator to measure economic progress. The level of real GDP is a good indicator for measuring economic well-being.