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Unit 1: ECONOMICS

Q1 What does economic study?

Economics studies about the way people choose to use resources to improve well-being Resources are anything pp use to produce goods and service

Resources includes the time and talent pp have available, the lands, buildings, equipments and other tools on hand and so on Well-being means satisfactions

or happiness pp gain from the products and services they choose to consume

Q2 Why do pp have to choose to use resources?

PP have to choose to use resource because of the limited resource but unlimited

pp need

Q3 What are 2 branches/ types of economics? What do they study?

2 types of economics are microeconomics and macroeconomics

- Microeconomics focuses on economic actions of individuals,

households, industries

- Macroeconomics studies the actions of larger entities such as a country,

a region, world or the international market place

Q4 What is economic theory of Adam Smith about?

First theory is Classical School of Adam Smith He believed that people who acted in their own self- interest produced goods and wealth that benefited all of society Gov should not restrict or interfere in markets because they could regulate themselves and there by, produce wealth at maximum efficient

- Capitalism is the mode of production that includes private ownership of means of production

Q5 What is Karl Marx economic theory? What is it about?

Second theory is Marxism theory and Karl Mar, he believed that such

exploitation of factory owners and CEOs leads to social unrest and class

conflict Laborers should own and control the means of production Karl Marx pointed out the weakness in capitalism CEOs or employers exploit employees, which leads to class conflict and social unrest

 Laborers should own and control of production

Unit 2: ECONOMICS SYSTEM

Q1 What is a free market economy? A planned economy? What are

differences between market eco and planned eco?

 Free market eco : Market eco is a system in which the market that is the

relation between producers and consumers, buyers and sellers, investors and workers, management and labour is regulated by the law of supply and demand Companies compete freely and government influences the economy through its fiscal and budgetary policies

 Planned economy: is an economic system whereby the structure of the

market is deliberately planned by the state In the planned economy, production and consumption quotas are fixed beforehand and there is no real competition between industrial or commercial organizations

ECO:

- Economic activities are fully

depend on the role of market

force

- Producer are free to produce the

highly demanded goods in order

to maximise their profits

- Self- interest is the prime

consideration

- Economic activities are decided

by some central authority or by the Gov

- Producer are not free to produce

the highly demanded goods in order to maximise their profits

- Social welfare is the prime

consideration

Unit 3: MICROECONOMICS

Q1 What is microeconomics concerned with?

Microeconomics is concerned with the decision made by small economic units – consumers, workers, investors, owners of resources, and business firms It’s also concerned with the interaction of consumers and firms to form markets and industries

? In planned economy, who makes decisions on allocation of resources?

Government

? In market economy, who makes decisions on allocation of resources?

 Consumers, firms, employers, employees (workers)

Q2 What does theory of the firm indicate? Theory of consumer indicate?

- The theory of the consumer describes how consumers decide to spend their

money income and limited budget to maximize their well-being based on their individual preferences

- Theory of firms describes how firms decide to allocate resources such as

technology, capital production capacity to maximize their profit

Q3 Discuss the allocation of scarce resources in microeconomics

Microeconomics studies about the actions of individuals and industries It describes how to make the most of the limits such as limited income, limited technology, limited time, etc,… Due to these limited resources, consumers, workers and firms have to make trade-offs

For example, consumers trade off current consumption with future

consumption Worker have to trade off working now with continuing

education, working for large corporation with small corporation, labor with leisure Firms have to choose the type of goods to produce, hire more workers

to build a new factory

Q4 Role of prices?

Trade offs are partly based on the price => price is very important

Q5 What is a market?

Market is the place where consumers, workers and firms interact In free

market economy, the price of a good is decided in the market by the

interactions of consumers, workers, firms In a centrally economy, prices are set by the gov

Q6 What are the main themes of microeconomics?

The first important theme of microeconomics is making optimal trade-offs Consumers, workers and firms make the best choices for their limits such as

income, time and budget The second important theme is the role of price, which the trade-offs described in the first one are partly based on The central role of markets - the third theme of microeconomics, describes how to

determine the prices in the different markets

Unit 4: MACROECONOMICS

Q1 What is the goal of macroeconomics :

The goal of macroeconomics is to look at overall economic trend such an employment levels economic growth, balance of payments, inflation, so on Macroeconomic factors include inflation, economy growth, unemployment, international business, so on

Q2 What are 2 microeconomics policies? What are some differences

between them?

2 major macroeconomics policies are moneytary policy and fiscal policy The objectives are to promote economic growth and keep inflation under control There are some differences between them Firstly, Ministry of Finance makes decisions fiscal policy while monetary policy is supervised by Central Bank Secondly, fiscal policy controls gov’s revenue such as gov’s spending and taxation but Central Bank’s job is to control a nation’s money supply Thirdly, tools of fiscal policy are tax and gov’s spending, moneytary policy uses some tools like reserve requirement, discount rate, OMO

Q3 What are some differences between micro and macroeconomics?

- Microeconomics focuses on the action of individuals and industries while

macroeconomics studies activities of an entire country or the international marketplace

- The goal of macroeconomics is to make regarding the allocation of

resources and prices of goods, focuses on demand and supply while the goal

of macroeconomics is to look at overall economic trends such as

employment levels, economic growth, balance of payments,…

- The major policies of microeconomics are price policy, competition

policy… while the major policies of macroeconomics are monetary policy

and fiscal policy

- Microeconomics takes a bottom-ups approach to analysing the economy

while macroeconomics takes a top-down approach

- It is the study of country and gov decisions

- Focuses on the activities of entire country or

international economy, economy-wide

phenomenal

- Look at overall economic trends:

employment levels, economic growth,

inflation,

- Uses: fiscal policy and moneytary policy

- Top-down approach

- It is the study of individual and businesses decisions

- Focuses on the economic behaviour

of individual: household, consumer, enterprise,…

- Make regarding the allocation of resources and prices of goods and services

- Uses: price policy and competitive policy

- Bottom-up approach

Unit 5: DEMAND AND SUPPLY

Q1 How does the price of good influence its Quantity demanded and

quantity supplied?

A change in the price cause a change in Qd and Qs when other factors are

constant

- If price of a good increases, the quantity supplied will increase and vice

versa, the quantity demand will decrease

- If price of a good decreases, the quantity supplied will decrease and vice

versa

 A change in the price causes a movement along the demand/ supply curve

Q2 Named some shift factors of demand?

Shift factors of demand Nhân tố phụ của cầu

Society’s income Thu nhập của xã hội

Prices of other goods Giá các mặt hàng khác

Expectation Mong muốn

Tastes Thị hiếu

Q3: Example about a change in a shift factor that can lead to a change in D/ S.

- When other factors are constant, if society’s income increases, demand for

luxury goods and normal goods will increase, demand for inferior goods will decrease

- Demand curve for luxury and normal gooods shift to the right, demand

curve for inferior goods shifts to the left

Ex: When other factors are constant, if price of Honda motorbikes increases, demand for Yamaha motorbikes will increase Demand curve shifts to the right

- When other factor are constant, if the price of petrol increase, demand for

petrol motorbikes will decrease Demand curve shifts to the left

Ex: Input: raw materials, labor, machine,…

- When other factor are constant, if there is an improvement in technology,

supply will increase and supply curve shifts to the right

Q4 1 Describe demand curve?

- Prices and shift factors of demand( society’s income, prices of other goods, expectations, tastes) can influence buyer behavior

- On the model/graph, a price change causes a movement along a given demand curve A change in one of shift factors causes a shift of entire demand curve to the left or to the right

2 Describe supply curve?

- Prices and shift factors ( including taxes, technology, prices of inputs or supplier’s expectations) can influence seller behavior

- On the model, a price change causes a movement aong a given supply curve

A change in one of shift factors causes a shift of entire supply curve to the left

or to the right

Unit 6: PUBLIC FINANCE

Q1 What are some sources of gov revenue?

Gov revenue comes from many kinds of taxes, profit from investment, fees and fines, and borrowing by issuing and selling gov securities (mostly bonds) Some different types of tax are:

1 Income taxes: is the tax imposed on personal income

2 Corporate income tax: is the tax imposed on profit of company

3 Payroll tax: the tax imposed on salaries or wages of employee

4 Gain tax: imposed on frofit made by selling assets

5 Excise tax: imposed on special goods and services like beer, alhocol,…

6 Custom duty: imposed on imports

*What are the main sources of government revenue?

- There are 2 main source of government revenue First, tax revenue comes from three major sources: individual income taxes, payroll taxes and

employers, corporate income taxes Income taxes and corporate income taxes become “federal funds” and payroll taxes become “trust fund” The second one

is “borrowing” The US treasury borrows money by issuing bonds and other types of securities to finance the debt

Q2 What are 2 funds formed from goverment tax? What are they used to?

What type of

tax?

Payroll tax - Income tax

- Corporate tax For what

activities?

Very specific programs such as social security and Medicase

- Spend them and just about

anything when the President and Congress conduct the annual appropriation process

Q3: What are 2 types of gov/ federal debt?

The federal debt is the sum of the debt held by the public plus the debt held by federal accounts

+ The debt held by the public is total amount of money gov borrows from individuals or organizations in that country (domestic investors) or in other countries (foreign/international investors)

+ Debt held by federal accounts is total amount of money that the Treasury has borrowed from itself when trust fund run a surplus

Unit 7: FISCAL POLICY

Q1 What is the deficit spending? How is it helpful and harmful for the economy?

- Deficit spending is spending funds obtained by borrowing and printing

instead of taxation

- It can be useful or harmful for the economy.

+ Useful when unemployment rate is too high, gov borrows money to

undertake projects, which use workers who would be idle, it will create more jobs and the economy will expand because more money is being pumped into

it When pp have more income, they will spend more and production increase, more jobs are created

+ Harmful when the unemployment rate is low Gov pumps money into the market, which can increase supply, it may result in rising prices or inflation, and creates more competition for scarce workers and resources

Q2 Factors affecting decision on fiscal policy?

Factors affecting decision on fiscal policy include inside factors and outside factors Inside factors include level economic growth, level of unemployment

or inflation, ways to finance deficits, political consideration Outside factors include fiscal policies of other countries and requirements of ITM or World Bank

Q3 What is an expansionary/ contractionary fiscal policy?

Expansionary/Loose Contractionary/Tight

How By reducing taxation and increasing By increasing taxation and

public spending reducing public spending.

When It occurs when a Gow feels its economy

is not growing fast enough or

unemployment is too high

It occurs when economy is overheating and inflation is too high

Why With the aim of stimulating total

spending in the economy, known as

aggregate demand

To restrict demand and slow down the economy

Unit 12: MONETARY POLICY

Q1 What are 3 tools of MP? Which is the most regular?

There are three main tools of monetary policy

- The first tool is reserve requirement It is the percentage the Fed sets as the

minimun amount of reserves that banks must have for safety (by changing the RR, the Fed can increase or decrease the money supply: If the Fed

increase the RR, it contracts the money supply, banks have to keep more reserve so they have less money to lend out)

- The second one is discount rate - the rate of interest the Fed charges for

bank loans (by changing the DR, the Fed can expand or contract the money supply: If the Fed decrease the DR, it expands the money supply, banks

have to keep less discount so they have more money to lend out.) These two tools above are mainly used for major change

- The primary tool of monetary policy is open market operations-the Fed’s buying and selling Gov securities (to expand the money supply, the Fed

buys bonds To contract the money supply, the Fed sells bonds)

By changing 3 main tools, central bank can expand or contract money supply.

Q2 What is an expansionary/restrictive MP?

- Central bank uses expansionary MP when the economy is growing slowly

In this case, central bank decreases reserve requirement, reduces the

discount rate or buys more bonds This can increase money supply, increase aggregate demand

- Central bank uses restrictive MP when the economy is overheating In this

case, central bank increases reserve requirement, increases discount rate or

sells more bonds This will reduce lending capacity and increase interest

rate, thereby reducing money supply in the market

When When the economy is slows down, the gov

wants to increase aggregate demand

When the economy is overheating

How Encourage pp to borrow and spend more

money, increase the money supply

- Reduce bank lending capacity

- Reduce pool

- Lessened loan.

Effect

?

It causes the demand curve shift to the

right

It causes the demand curve shift to the left

Unit 8: TAXATION

Q1: What are some functions of taxation?

- Definition: Tax is compulsory fee gov collects from individuals and

organizations to finance gov’s programs/ activities/ expenditure

- Taxation is the gov’s action of collecting tax to finance its programs

* Functions:

- Tax is a source of gov revenue It is used to finance gov programs

- Tax is tool of fiscal policy So it is used to regulate the economy

- Each type of tax has its own functions For example, excise tax is used to

restrict/ limit consumption of some goods which is not good for health or

environment Custom duty is used to protect domestic industries And gov can

also encourage capital investment by permitting various method of accelerated

depreciation accounting that allow companies to deduct more of the cost of

investments from their profits, and consequently reduce their tax bills

- Main function of taxation is to raise revenue Government expenditure Gov

uses taxes to encourage capital investment by permitting various methods of

accelerated depreiciation accounting (deductiong costs of investment from