Master 5 Economic Concepts
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Become an Economist in less than 1 hour!
These concepts will not change over time. The knowledge you master here is useful your entire life.
You will learn the following 5 concepts:
• Supply & Demand
· Get insight into the most important theory in Economics
• Inflation & Deflation
· Should you save or spend?
• Exchange rates
· Know why exchange rates fluctuate and how that influences you
• Interest rates
· What price do you pay for renting money?
• Opportunity cost
· This theory will make you a better decision maker
Understand how businesses work, how the markets operate and get an A for your Economics course.
We start every video with the basics, and build from there step-by-step discussing a lot of relevant examples while staying within the 6 to 9 minute timeframe.
In less than 1 hour you have mastered the theory and will make better decisions in business, finance and your personal life.
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|Section 1: Supply & Demand|
The point of understanding supply and demand is knowing what happens to the price and quantity of a good or service when there is a change in the market.
When the price goes down the quantity demanded increases.
When the price goes up the quantity demanded decreases.
There are 3 reasons why it is that when the price goes down the quantity demanded increases:
When the price goes down the quantity supplied decreases.
When the price goes up the quantity supplied increases.
The quantity supplied decreases when the price goes down because there is less money to be made for suppliers.
There is more quantity supplied than demanded
There is more quantity demanded than supplied
|Quiz 1||7 questions|
Test your knowledge about the role of prices in the supply & demand graph
There are 5 shifters of the demand curve:
3.Price of related goods
4.Number of customers
When the demand curve moves inwards (shifts to the left) at any price people are willing to buy less. In other words, at any price there is less quantity demanded.
When the demand curve moves outwards (shifts to the right) at any price people are willing to buy more. In other words, at any price there is more quantity demanded.
There are 5 shifters of the supply curve:
1.Number of producers
4.Price of recourses
When the supply curve moves inwards (shifts to the left) at any price there is less supply.
When the supply curve moves outwards (shifts to the right) at any price there is more supply.
|Quiz 2||8 questions|
Test your knowledge about the 5 movers of the demand and supply curve
|Section 2: Inflation & Deflation|
In the consumer price index- for urban consumers (CPI-U) they compare two baskets of goods to determine the inflation or deflation.
Inflation is the rise in price of goods and services over a longer period of time.
Deflation is the fall in price of goods and services over a longer period of time.
Causes of inflation
·Increase in money supply
·More demand than supply
Arguments for inflation
·You will consume now while it is cheaper
·You will invest more
·Your debt becomes cheaper
Argument against inflation
·People with a fixed income lose purchasing power
Causes of deflation
·More supply than demand
Arguments for deflation
·Goods and services are cheaper
Argument against deflation
·You postpone consumption
·You stop investing
·Your debt becomes more expensive
|Quiz 3||9 questions|
Test your knowledge about inflation & deflation
|Section 3: Exchange rates|
A good definition of exchange rates is: how much domestic currency do I need to buy 1 unit of a foreign currency?
A currency can appreciate and depreciate.
·When the Euro appreciates compared to the USD we need less Euro’s to buy the same USD.
·When the Euro depreciates compared to the USD we need more Euro to buy that same 1 USD.
Three main groups demand currency:
2.People who buy foreign goods and services
3.For investment purposes
The government of foreign government supplies currency.
·If they supply less money the currency will appreciate
·If they supply more money the currency will depreciate
When the Euro depreciates Europe will export more and therefore America will import more. As a result when the Euro depreciates the USD will appreciate. Europe as a result will import less and therefore America will export less.
|Quiz 4||10 questions|
Test your knowledge about exchange rates
|Section 4: Interest rates|
We have to pay a prize for renting money. When we loan money from the bank they cannot use that money, meaning the bank has opportunity cost.
·We pay interest to the bank when we take a loan and the bank pays us interest when we deposit money in our savings account.
·A 5% interest rate over $1000 means we pay or receive $50 at the end of the year
We have to take inflation into account.
Real expected interest rate = Nominal rate – expected inflation rate
Real realized interest rate= Nominal rate – inflation rate
·When the demand of money increases the interest rate goes up
·When the demand of money decreases the interest rate goes down
·When the supply of money increases the interest rate goes down
·When the supply of money decreases the interest rate goes up
Compound interest rates are one of the most important ways to grow your pension. Example of compound interest rates.
You deposit $10.000 into your savings account with a 5% interest rate:
Year 1: $10.000 + $500
Year 2: $10.500 + $525
Year 3: $11.025 + 551.25
|Quiz 5||8 questions|
Test your knowledge about interest rates
|Section 5: Opportunity cost|
From making choices opportunity cost arise. Opportunity cost is the option you decide to not do. For example: you can buy a bike or a computer. If you decide to buy a bike the opportunity cost for buying that bike is a computer.
·The Production Possibilities Frontier (PPF) shows us how efficient a country an be with different production possibilities
·Opportunity cost often increase, we can see that in the bow shaped curve of the PPF graph
|Quiz 6||6 questions|
Test your opportunity test knowledge.
During the past years I started many businesses, mainly online, ranging from football affiliate websites to discovering upcoming food trends and product development. I did this all whilst travelling extensively to 5 different continents, working as an online instructor and as a teacher volunteer in Fiji.
In 2013 I completed a Masters of International Business in Australia. After graduating I returned home to the Netherlands to work on a start-up. I than got the opportunity to move to London where I now work in a great international environment.
As an entrepreneur, traveller, student and an enthusiastic reader of business and self development books I always find myself searching for great content. Finding new information that makes me grow as a person is what I thrive on. Hence the reason to join Udemy: to share my expertise and give students that same feeling while connecting with people from all over the world.