* GDP; what it measures and how it is measured
GDP measures the country´s overall economic output. GDP measures production regardless of the various uses to which that production can be put. It is measured with this formula: GDP= C + INV + G + (EX-i)
* Inflation; what it measures and how it is measured
Inflation is a rise in the general level of prices ofgoods and services in an economy over a period of time. Inflation is measured as an annual percentage increase. To measure inflation there are two main price indexes:
Consumer Price Index- A measure of price changes in consumer goods and services such as gasoline, food, clothing, and cars.
Producer Price Indexes- A family of indexes that measures the average change overtime in selling pricesby domestic producers of goods and services.
* Demand Curve and Law of demand; elastic VS inelastic curve
Demand curve= The demand curve is closed that there is a negative relationship between price and quantity, except Geffen paradox.
Law of demand= state the inverse relationship between price level and quantity demanded. If price of the commodity falls its demand will raise and viceversa
Elastic vs. Inelastic curve:
If the demand for a product is not affected by a change in price, the product is said to have "inelastic demand." Products that people need to survive, such as food, are inelastic. People will buy them no matter what the price is, because they need the product.
Elasticity gives the percentage change in quantity demanded in response to a one percent change inprice holding constant all the other determinants of demand, such as income.
-Price Elasticity Formula; know how to use it and interpret it.
The price of elasticity of demand measures the rate of response of quantity demanded due to price change. The formula for the price elasticity of demand is:
-Regressions and Variables; Positive and Negative relationships
- Regresssionsanalysis is a technique for measuring their relationship between two interval or ratio level variables
-A model shows now and under what conditions two (or more) variables are related
-Scatterplots allow political scientists to identify positive or negative relationships
- Linear Equation: y=a+bx, a and b can be either positive or negative
B) INTRODUCTORY CONCEPTS IN FINANCE
* Variablevs. Fixed Income; explain the difference; give examples (bonds, stocks, FX exchanges, etc.).
Fixed Income= refers to any type of investment that yields a regular or fixed return. EXAMPLE= If you lend money to a borrower and the borrower hast to pay interest once a month, you have been issued a fixed- income security.
Variable Income= an income that depends on the amount of products orservices delivered (SOLD) during a period. As opposed to fixed income, this is received on a regular periodic basis and is a constant amount.
* Financial Indexes; Understand how they work and what they are used for. Pay attention to the S&P500, NASDAQ, DOW JONES, BOLSA, CASE SCHILLER INDEX
Financial Index= A statistical indicator providing a representation of the value of the securities whichconstitute it. Indices often serve as barometers for a given market or industry and benchmarks against which financial or economic performance is measured.
NASDAQ= Este índice mide el valor de mercado de todas las acciones americanas y extranjeras que cotizan en el Mercado de Valores Nasdaq. Se lo elabora mediante el promedio ponderado de todas las acciones que se transan. Las variaciones deprecio de cada valor producen un aumento o una disminución del índice en proporción a su ponderación dentro del mercado. El Nasdaq Composite Index está compuesto por ocho subíndices correspondientes a sectores específicos: Banca, Biotecnología, Informática, Finanzas, Empresas Industriales, Seguros, Telecomunicaciones y Transportes.
Durante el último año el índice de Nasdaq ha tenido movimientos...