UNit 1: Economics

1. What is economics?
Economics is the study of how people choose to use the resources to satisfy well-being.
2. What is well-being?
Well-being: satisfaction from using goods or services.
3. What are important choices in economics?
Important choices involve how much time to devote to work, to school, and to leisure, how many
dollars to spend and how many to save, how to combine resources to produce goods and
services, and how to vote and shape the level of taxes and the role of government.
4. What are resources?
Resources include the time and talent people have available, the land buildings, equipment, and
other tools on hand, and the knowledge of how to combine them to create useful products and
services.
5. Why do people study economics? / How can we benefit from studying economics?
Studying economics helps to understand human thought and behavior.
6. What are factors of production?
Human force, capital, material, equipment, technology,...
7. What is difference from theory of Adam Smith and Marxism?
• “Classical School” by Adam Smith: People with their own self-interest can produce
goods and wealth that benefit all of society. Market can regulate itself to maximize
efficiency, government shouldn’t interfere in it.
• “Marxism” by Karl Marx: Capitalism will fail because it can cause social unrest and class
conflict. Laborers should own and control means of production.
8. What does theory of Keynesian school indicate?
This theory is about the role of government in capitalism economy. Government can regulate
economy by economic policies.
9. What is difference from theory of Adam Smith and Marxism?
• “Classical School” by Adam Smith: People with their own self-interest can produce
goods and wealth that benefit all of society. Market can regulate itself to maximize
efficiency, government shouldn’t interfere in it.
• “Marxism” by Karl Marx: Capitalism will fail because it can cause social unrest and class
conflict. Laborers should own and control means of production.
10. What does theory of Keynesian school indicate?
This theory is about the role of government in capitalism economy. Government can regulate
economy by economic policies.

Unit 3: Microeconomics
1. What are two types of Microeconomics?
They are Planned economy and Market economy
• A planned economy is an economic system in which government directly controls
economy and there is no competition.
• A market economy is an economic system in which government controls economy by
economic policy because market can regulate itself by demand and supply..
2. What are some examples of economic relations?
Buyer - Seller
Borrower - Lender
Saver- Spender
3. What are market forces?
Demand and Supply
4. What is a free market economy? a planned economy? What are differences between
free market economy and planned economy?
• A planned economy is an economic system in which government directly controls
economy and there is no competition.
• A market economy is an economic system in which government controls economy by
economic policy because market can regulate itself by demand and supply.

Planned economy Market economy

Government Government directly Government controls economy by economic

control controls economy policy. Market can regulate itself by demand
and supply

Competition There is no Companies compete freely

among companies competition
5. How do companies compete in market economy?
Companies compete freely
6. What does trade-offs mean?
trade-offs: an exchange that occurs as a compromise
7. What does theory of consumer indicate?
Consumer theory describes how consumers, based on their preferences, maximize their well-
being by trading off the purchase of more of some goods with the purchase of less of others.
8. Give some examples of trade-off among consumers?
Consumers have limited income so they trade off buying some more goods with buying less of
others./ They trade off spending with saving.
9. Give some examples of trade-off among workers?
Workers have limited time so they trade off working for a small company with working for a big
company.
10. What does the theory of the firm indicate?
The theory of the firm describes how trade-offs can be best made.
11. Give some examples of trade-off among firms?
Firms have limited capital so firms trade off hiring more workers with buying more machine.
12. What are 3 important themes of microeconomics?
They are: Optimal trade-off, Role of price, Role of market.

Unit 4: Macroeconomics
1. What is the goal of macroeconomics?
Macroeconomics looks at overall economic trend such as employment level, economic growth,
balance of payments, GDP, inflation, ...
2. What are two main policies of macroeconomics, their tools and their purposes?

Fiscal policy Monetary policy

Who makes Ministry of Finance Central Bank

decision

Tools • Government spending Money supply

• Government revenue
Objective • Promote economic growth • Promote economic growth
• Keep inflation under control • Keep inflation under
control

3. What are differences between micro and macroeconomics?

Microeconomics Macroeconomics

Definition studies economic activities of studies the economic activities of entire

individuals and industries country and international marketplace

Issue demand, supply, price, market... employment rate, policies, GDP, inflation...

Approach bottoms-up top-down

4. Why is it said that micro and macroeconomics interdependent?

For example, increased inflation (macro effect) would cause the price of raw materials to
increase for companies and in turn affect the end product’s price charged to the public.
5. What is GDP? Iflation?
• GDP (Gross domestic product): total value of goods produced in a country in a year.
• Iflation: increase in the money supply, prices of goods and decrease in the value of
money.

Unit 5: Demand and Supply

1. What is demand? What is quantity demanded? What is difference between demand
and quantity demanded?

Quantity demanded Demand

Definition • Quantity demanded is the quantity • Demand is the quantity of

of goods and services buyers are goods and services buyers
able and willing to buy at a certain are able and willing to buy at
price. various prices.

Factor price factors shift factors

causes a
change

Change in the movement along the demand curve the entire demand curve to
demand shift to the left/right
curve
Other factors are constant

2. What is supply? What is quantity supplied? What is difference between supply and
quantity supplied?
Quantity supplied Supply
 • Quantity supplied is the quantity of • Supply is the quantity of
goods and services sellers are able goods and services sellers
and willing to sell at a certain price. are able and willing to sell at
various prices.

Factor price factors shift factors

causes a
change

Change in the movement along the demand curve the entire demand curve to
demand shift to the left/right
curve
Other factors are constant

3. What are some shift factors of demand, supply?

• Some shift factors of demand: tax, population,...
• Some shift factors of supply: technology, tax, inputs, number of suppliers,...
4. How does price of a good affect demand, supply?
• A change in the price of a good causes a change in quantity demanded. Other factors
are constant.
• If the price of a good increases, quantity demanded will decrease.
• If the price of a good decreases, quantity demanded will increase.
• A change in the price of a good causes a change in quantity supplied. Other factors are
constant.
• If the price of a good increases, quantity demanded will increase.
• If the price of a good decreases, quantity demanded will decrease.
5. When is the market in equilibrium? Excess demand? Excess supply?
• Market in equilibrium: quantity demanded is equal to quantity supplied.
The market price = equilibrium price
• Excess demand: quantity demanded is more than quantity supplied.
The market price < equilibrium price
• Excess supply: quantity supplied is more than quantity demanded.
The market price > equilibrium price
Unit 6: Public finance
1. What is public finance concerned with?
Public finance is concerned with how the government raises and spends money.
2. What is federal fund? Trust fund?
• Trust fund is from Payroll tax. It is used for specific programs such as security and social
medicare. Programs are the same from year to year.
• Federal fund is from individual income tax and corporate tax. It is used for general
programs. Programs can be different from year to year basing on annual appropriation
process.
3. What are main sources of government’ revenue?
Government can raise money from different types of tax: individual income tax, corporate
income tax, payroll tax, excise tax, customs duties,...
4. How does the government borrow money and who does it owe to? (Unit 6)
• Government can borrow money by issuing and selling bonds and pays prefixed interest
rate.
• Government debt: Debt held by the public and Debt held by federal accounts.
5. What is customs duties/ Excise duties? Individual Income tax? Corporate tax?
 • Customs duties is the tax imposed on imports, exports.
• Excise tax is the tax imposed on specific goods to limit consumption.
• Individual income tax is the tax imposed on income of individuals, paid by employers.
• Corporate tax is the tax imposed on profit of a company.

Unit 7: Fiscal policy

1. What is deficit?
Deficit: the government spends more than it receives.
2. What is deficit spending? Is it harmful or helpful?
• Deficit spending: Spending money from borrowing or printing instead of taxation.
• It’s helpful when unemployment is high because government borrows money to
undertake projects, it can create jobs for idle workers.
• It’s harmful when unemployment is low because it can cause inflation.
3. How does the government do to finance deficit?
Governments borrow and print money.
4. Under what circumstances can fiscal policy be expansionary? Contractionary? Why?
• Government should use expansionary fiscal policy when slow economic growth and high
unemployment.
Government will reduce taxation and increase public spending.
• Government should use contractionary fiscal policy when overheating economy and high
inflation.
Government will increase taxation and reduce public spending.
5. What are some factors to be considered when making fiscal policy?
• Inside factors: Future employment level, economic growth, borrowing or printing money,
politics.
• Outside factors: Fiscal policy of other countries, requirement in IMF.
6. Why should the government consider fiscal policies of other countries?
Governments want to attract investment to develope economy.

Unit 8: Taxation
1. What is regressive tax? / Progressive tax?
• Regressive tax: The same tax rate for the high and low income people. It can’t
redistribute the society income. The low income people have to pay the same tax rate as
the high income people.
• Progressive tax: Higher income, higher tax rate. It can redistribute society income. It
discourages people from working and investment.
2. What is direct and indirect taxes?
• A tax on wages and salaries or on company profits is a direct tax.
• A tax paid on property, sales transactions, imports, and so on is an indirect tax..
3. What is tax avoidance? Tax evasion?
• Tax evasion: making false declarations to the tax authorities to reduce tax.
• Tax avoidance: reducing the tax money to the legal minimum.
4. What are some ways to for an individual, a company to avoid tax?
• Avoiding tax on salaries: Using loopholes in tax law, tax shelter, tax deductible.
• Avoiding tax on company’s profits: make a tax loss, set up head office in tax havens,
launder money.
5. What is tax shelter? Tax deductible? Tax haven? Laundering money?
• Tax shelter: postpone paying tax
• Tax deductible: subtract money from taxable money.
• Tax haven: a country has low tax rate.
 • Laundering money: put taxable money into different companies to disguise the origin of
money.
6. What do criminal organizations do to disguise the origin of money?
Laundering money
7. What are some functions of taxation?
• Raise government revenue.
• Redistribute society income.
• Regulate economy.
• Limit consumptions.
• Protect domestic goods.
8. What is marginal rate?
The marginal rate - the tax people pay on any additional income.

Unit 10: Insurance

1. What is insurance in financial definition?
Insurance is the financial arrangement that redistributes the cost of unexpected losses.
2. What is insurance premium? Compensation? Insurance policy?
• Insurance premium: the amount of money insurer collects from insured and promise to
compensate in case of losses.
• Compensation: the amount of money insurer pays to insured in case of losses.
• Insurance policy: financial agreement between insured and insurer.
3. What does the insured receive when a loss occur?
The insured receive compensation when loss occurs in case of unexpected losses.
4. Why are people willing to pay insurance premium?
• They will get compensation in case of loss.
• They have no anxiety about loss.
5. What is difference between insurance and gambling?
Gambling will not enforce while insurance will enforce.
6. How can an insurance system accomplish the redistribution of costs of unexpected
losses?
• Insurer collects premium from every insured.
• Very few insured suffer from unexpected losses.
7. What do you know about the contracts of insurance?
Contracts of insurance from a special class of contract in that the law requires parties to them,
the insured and the insurer, to exercise the utmost good faith towards each other.

Unit 11: Money and its functions

1. What is the concept of money?
• A commodity as a medium of economic exchange.
• Express prices and values of goods.
• Measure of wealth.
• Circulates from person to person and country to country to facilitate trade.
2. What are 4 functions of money? What is the most important function in your opinion?
• Medium of exchange. (The most important function of money)
• Measure of value.
• Store of value.
• Standard of deferred payments.
3. What is unit of account? Medium of exchange?
• Unit of account is the unit in which the price is quoted and account is kept.
 • Medium of exchange is anything used for payments for goods and services and in
settlement of debts.
4. How is money functioned as a standard of deferred payments? Store of value?
• Standard of deferred payments: Money is used to pay after you buy something.
• Store of value: Money is used to make purchases in the future. This function can suffer
from inflation.
5. What are 2 kinds of money and differences between them?
• They are Commodity money and Token money.

Commodity money Token money

The value in use of commodity money is about The value in use of token money is
equal to the value of material contained in it. higher than its cost of production.
Example: gold, copper...
Example: paper note...

Unit 12: Monetary policy

1. What are 3 major tools of monetary policy? What is the most popular tool?
• 3 major tools of Monetary policy:
• Reserve requirement
• Discount rate
• Open market operation (OMO)
• OMO is the major and most common tool because it is faster for central bank to change
money supply on OMO than changing reserve requirement or discount rate.
2. What is reserve requirement? Discount rate? OMO?
Reserve requirement is the percentage of the minimum amount of reserve member banks must
have.
• Discount rate is the rate of interest the Fed charges to banks when they lend to banks.
• OMO is the Fed’s buying and selling government securities.
3. What are 2 types of monetary policy? What is a restrictive monetary policy?
Expansionary monetary policy?
• 2 types of monetary policy:
• Expansionary monetary policy
• Restrictive monetary policy
• Central bank uses expansionary monetary policy when the economy is growing slowly.
In this case, central bank decreases reserve requirement, decreases discount rate or
buy more bonds. This can increase money supply, increase aggregate demand.
• Central banks uses restrictive monetary policy when the economy is overheating. In this
case, central bank increases reserve requirement, increases discount rate or sell more
bonds. This will reduce lending capacity, so reduce money supply in the market.
4. What are some services of banks and how banks make profit?
• Some services of banks: lending, saving, exchange currency, payment, insurance,
transfer money, ...
• Make profit from difference between interest rate of lending and saving, selling and
buying rate, fee for services.
•

Unit 14: The Foreign exchange market

1. What is foreign exchange market?
Foreign exchange market is the market in which national currencies are exchanged.
2. What is OTC market?
• No fixed trading hours, trading 24 hours a day.
• No physical meeting place.
• Communication instruments: telephone or computer.
3. What are 2 types of transactions in foreign exchange market? A forward transaction?
Spot transaction?
2 types of foreign exchange transactions: Spot transaction and Forward transaction.
• Spot transaction: the actual exchange date is 2 business days after the value date.
• Forward transaction: the actual exchange date is specified date in the future, more than
2 days after the value date.
4. What is “bid rate” “offer rate”?
The highest exchange rate at which a buyer is willing to buy a currency.
• The lowest exchange rate at which a seller is willing to sell a currency.
5. What are 3 types of participants in the foreign exchange market?
• Customers
• Market makers
• Brokers

Unit 15: The Financial markets

1. What is the main function of financial markets?
Transfer funds from lenders/savers to borrowers/spenders.
2. What is securities market?
Securities market is the market in which bond and stock are exchanged.
3. What is debt market? Equity market?

Debt market Equity market

• Debt instruments are exchanged. Equities are exchanged.

• 3 kinds of debt: short, intermediate • long-term.

and long term.

• Borrower pays the lenders fixed • Lenders share net income and
interest rate at regular intervals until assets of the borrowers basing on
the maturity date. the percentage of shares.

• Lenders don’t interfere in the • Lenders have a say in the

company’s operation. company’s operation.

4. What is a primary market? Secondary market?

Primary market Secondary market

• New issues of a security are sold to • Securities previously issued are

initial buyers. resold.

• Not well known to public. • Well known to public

 • Companies get new funds. • Companies get no new funds.

5. What is a debt instrument? Short-term and long-term debt instrument?

Debt instrument is a contractual agreement by the borrower to pay the holder of the instrument
fixed dollar amounts at regular intervals until a specified date, when a final payment is made.
• A debt instrument is short-term if its maturity is less than a year and long-term if its
maturity is ten years or longer.
6. What is the difference between exchanges and OTC market?

Exchanges OTC market

• physicsal meeting place • No physical meeting place

• Fixed hours • No fixed hours

7. What is a money market? Capital market?

Money market Capital market

• Short-term debts are • Intermediate and long-term debts and equities

exchanged are exchanged.

• High liquid • Less liquid