ECON-2006EG Study Guide - Quiz Guide: Market Failure, Income Distribution, Stagflation
7 Mar 2021
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Document Summary
Characteristics of perfect competition: homogenous goods, perfect information, rational behavior of actors, free entry and exit. Areas of market failure: stabilization: unemployment, inflation, fluctuation, allocation: public goods, externalities, information asymmetry, barriers to entry, monopolies, distribution: unemployed, old, sick, fairness . Intervention measures: stabilization: taxes, government expenditure, transfers, subsidies, (de)regulation, setting conditions, monetary policy (central bank, allocation: taxes, subsidies, laws, property rights, regulation, bans, rules, distribution: taxes, subsidies, transfers, education, expropriation, quota, maximum / minimum prices, stabilization policy: Economic goals of germany: price stability (ca. 2% inflation: high level of employment, steady economic growth (2% gdp per year, external equilibrium. Macroeconomic approaches for economic policy: neoclassical (supply-side oriented), markets are efficient and stable. Islm model: goods market: y = c + i + g+ nx => is. Investment is function of interest rate => i(r: lower interest rates lead to more investment, reducing interest rates leads to more investment and shifts is curve.
