Myanmar Matriculation Economics cheat sheet

Economics studies how scarce resources are allocated to satisfy unlimited human wants; microeconomics examines individual units, macroeconomics examines aggregates.

The central problem of every economy: what to produce, how to produce, and for whom to produce.

Factors of production: land (rent), labour (wages), capital (interest), entrepreneurship (profit).

Production possibility curve (PPC) shows maximum combinations of two goods with given resources; points inside are inefficient, points outside are unattainable.

A rightward shift of the PPC requires growth in quantity or quality of factors of production or improved technology.

Positive economics states what is; normative economics states what ought to be and involves value judgements.

Ceteris paribus means all other things being equal; it isolates the effect of one variable.

Free goods have zero opportunity cost (air); economic goods are scarce and command a price.

Micro vs macro distinction: price of rice is micro; national inflation rate is macro.

Scarcity means limited resources relative to unlimited wants; it forces choice and creates opportunity cost.

Opportunity cost = value of the next best alternative forgone when a choice is made.

Opportunity cost is measured in real terms (units of the alternative good), not in money, unless money is the forgone alternative.

On a linear PPC, opportunity cost is constant; on a concave (bowed-out) PPC it increases as more of one good is produced.

Sunk costs are not part of opportunity cost because they cannot be recovered.

Free goods have zero opportunity cost; scarce goods have positive opportunity cost.

Time is a scarce resource: choosing to study has an opportunity cost in forgone leisure or earnings.

A shift along a PPC shows opportunity cost; a shift of the PPC shows growth, not opportunity cost.

Law of demand: ceteris paribus, quantity demanded rises as price falls; demand curve slopes downward.

Movement along the demand curve is caused by price change; a shift is caused by income, tastes, prices of related goods, expectations, or population.

Law of supply: ceteris paribus, quantity supplied rises as price rises; supply curve slopes upward.

Equilibrium price is where quantity demanded equals quantity supplied; at a price above equilibrium there is a surplus, below it a shortage.

An increase in demand raises equilibrium price and quantity; an increase in supply lowers price and raises quantity.

Normal goods: demand rises with income. Inferior goods: demand falls with income.

Substitutes have positive cross-price elasticity; complements have negative cross-price elasticity.

A price ceiling below equilibrium creates shortage; a price floor above equilibrium creates surplus.

Price elasticity of demand (PED) = % change in quantity demanded / % change in price; use the midpoint formula for accuracy.

PED > 1 elastic; PED < 1 inelastic; PED = 1 unit elastic; PED = 0 perfectly inelastic; PED = infinity perfectly elastic.

Total revenue test: if price rise raises revenue, demand is inelastic; if it lowers revenue, demand is elastic.

Determinants of PED: number of substitutes, share of income, necessity vs luxury, time period.

Income elasticity of demand (YED) = % change in quantity / % change in income; YED > 0 normal, YED < 0 inferior, YED > 1 luxury.

Cross elasticity of demand (XED) = % change in quantity of X / % change in price of Y. Positive for substitutes, negative for complements.

Price elasticity of supply (PES) = % change in quantity supplied / % change in price; higher when time to adjust is longer.

Elasticity affects tax incidence: the more inelastic side of the market bears more of the tax burden.

Law of diminishing marginal utility: as consumption of a good increases, marginal utility falls; total utility rises while MU is positive.

Consumer equilibrium: MUx/Px = MUy/Py; utility is maximised when marginal utility per kyat is equal across goods.

Law of diminishing returns (short run): adding variable inputs to fixed inputs eventually reduces marginal product.

Short-run costs: TC = TFC + TVC; AC = TC/Q; MC = change in TC / change in Q.

MC cuts AC at its minimum point; the MC curve passes through the minimum of the AVC and AC curves.

Long-run average cost (LRAC) is the envelope of short-run AC curves; economies of scale cause it to fall.

Economies of scale: specialisation, bulk buying, technical efficiency. Diseconomies: management and coordination problems.

Law of variable proportions: total product rises, then rises at a diminishing rate, then falls.

Perfect competition: many buyers and sellers, homogeneous product, free entry and exit, price taker; long-run equilibrium at P = MC = minimum AC.

Monopoly: single seller, no close substitutes, barriers to entry, price maker; profit maximised where MR = MC.

Monopolistic competition: many firms, differentiated products, some price-setting power, free entry, excess capacity in long run.

Oligopoly: few firms, interdependence, kinked demand curve explains price rigidity; collusion may form a cartel.

Profit-maximising rule for all structures: produce where MR = MC, provided P >= AVC in the short run.

Shut-down point: firm exits short run if price falls below minimum AVC.

Price discrimination requires market separation, different elasticities, and no resale.

Allocative efficiency requires P = MC; monopoly produces less output and charges a higher price than perfect competition.

GDP = total market value of final goods and services produced within a country in a year.

GNP = GDP + net factor income from abroad. NNP = GNP - depreciation.

National income at market prices minus indirect taxes plus subsidies equals national income at factor cost.

Expenditure approach: Y = C + I + G + (X - M).

Income approach: sum of wages, rent, interest and profit. Output approach: sum of value added by sectors.

Nominal vs real GDP: real GDP is measured at constant base-year prices; GDP deflator = nominal/real x 100.

Circular flow: injections (I, G, X) raise national income; leakages (S, T, M) reduce it; equilibrium when injections = leakages.

Multiplier k = 1 / (1 - MPC) = 1 / MPS; a change in investment changes income by k times the investment change.

Types of unemployment: frictional, structural, cyclical, seasonal, disguised.

Functions of money: medium of exchange, unit of account, store of value, standard of deferred payment.

Money supply measures: M1 = currency in circulation + demand deposits; broader measures add time and savings deposits.

Commercial banks create credit through the deposit multiplier; maximum credit creation = initial deposit x 1/reserve ratio.

Central bank functions: note issue, banker to government, banker to banks, lender of last resort, monetary policy, exchange rate management.

Quantity theory of money: MV = PT (Fisher); an increase in money supply tends to raise the price level.

Expansionary monetary policy: lower policy rate, lower reserve ratio, buy government securities, ease credit controls.

Contractionary monetary policy: raise policy rate, raise reserve ratio, sell securities, tighten credit.

Monetary policy affects inflation and output through interest rate, credit and asset price channels.

Inflation types: demand-pull, cost-push; effects include erosion of real incomes and uncertainty for investment.

Government budget: revenue (taxes, fees, grants) and expenditure (current and capital).

Budget deficit = government expenditure - government revenue; financed by borrowing, aid or money creation.

Direct taxes fall on income and wealth; indirect taxes fall on goods and services and can be shifted to consumers.

Tax principles: equity (ability to pay), certainty, convenience, economy; progressive, proportional and regressive structures.

Laffer curve: beyond some rate, higher tax rates reduce tax revenue by discouraging work and encouraging avoidance.

Fiscal policy tools: government spending and taxation. Expansionary: raise spending, cut taxes. Contractionary: cut spending, raise taxes.

Automatic stabilisers: unemployment benefits and progressive taxes dampen the cycle without new legislation.

Crowding out: government borrowing can raise interest rates and reduce private investment.

Public debt burden depends on debt-to-GDP ratio and on whether borrowing funds capital or consumption.

Absolute advantage: producing more with the same resources. Comparative advantage: lower opportunity cost; basis for mutually beneficial trade.

Terms of trade = (index of export prices / index of import prices) x 100.

Balance of payments: current account (goods, services, income, transfers) + capital and financial account + errors and omissions = 0.

Trade balance = exports of goods - imports of goods; a current account deficit must be financed by capital inflows or reserves.

Depreciation of a currency makes exports cheaper and imports dearer, improving the trade balance if Marshall-Lerner condition holds.

Appreciation: exports dearer, imports cheaper; tends to worsen the trade balance.

Exchange rate systems: fixed, floating, managed float. Demand and supply of currency determine a floating rate.

Protection tools: tariffs, quotas, subsidies, embargoes, administrative barriers.

Free trade gains: specialisation, larger markets, economies of scale, technology transfer.

Economic growth is a rise in real GDP; economic development also includes health, education, equality and structural change.

Development indicators: GDP per capita, HDI (income, education, life expectancy), poverty headcount, Gini coefficient.

Obstacles to development: low savings and capital, rapid population growth, weak infrastructure, political instability, dependence on primary exports.

Rostow stages: traditional society, preconditions, take-off, drive to maturity, high mass consumption.

Planning types: indicative (market-guided) and directive (command); Myanmar has used market-oriented reforms since the late 1980s.

Myanmar's economy rests on agriculture (rice, pulses), natural gas, mining (jade), garments and tourism.

Development policy priorities: infrastructure, electricity, rural credit, SME finance, human capital and institutional reform.

Foreign direct investment, official development assistance and remittances are major external development finance sources.

Sustainable development requires balancing growth with resource use and environmental protection.

Economic growth = increase in real national output; development = growth plus improvement in welfare and structural change.

HDI components: life expectancy, mean and expected years of schooling, GNI per capita (PPP).

Gini coefficient ranges 0 to 1; higher values indicate greater income inequality.

Harrod-Domar: growth rate = savings rate / capital-output ratio.

Lewis two-sector model: surplus rural labour transfers to modern industry, raising productivity.

Myanmar reform milestones: market-oriented reforms, 2012 foreign investment law, 2016 investment law, Myanmar Sustainable Development Plan.

Export concentration in natural gas and garments makes Myanmar vulnerable to external shocks.

Microfinance and rural credit expand access to capital in agriculture, where most employment lies.

Development finance sources: FDI, ODA, remittances, and multilateral loans.

Structural change: share of agriculture in GDP and employment falls as industry and services grow.

Myanmar's labour force is concentrated in agriculture; productivity growth requires mechanisation and rural finance.

Myanmar Sustainable Development Plan (2018) focuses on peace, prosperity and people with five goals.

SEZ (Thilawa) and industrial zones attract export-oriented investment.

Human capital: education and health spending raise long-run productivity; Myanmar has underinvested historically.

Informal sector and migrant remittances are large; policy must account for them in national accounts.

Infrastructure gaps: electricity access, roads, ports and digital connectivity constrain growth.

Sustainable development balances growth with resource depletion and environmental protection.

Growth vs development: growth is quantity, development is quality of life.

Rostow's stages: traditional, preconditions for take-off, take-off, drive to maturity, age of high mass consumption.

Balanced vs unbalanced growth: balanced spreads investment across sectors; unbalanced concentrates on leading sectors.

Import substitution vs export promotion: Myanmar's garment sector illustrates export-led job creation.

Foreign direct investment brings capital, technology and jobs; risks include profit repatriation and enclave effects.

ODA and concessional loans finance infrastructure; debt sustainability depends on debt-to-GDP and export earnings.

Myanmar's poverty is concentrated in rural and conflict-affected areas.

Sustainable Development Goals (SDGs) link growth to poverty, education, health and environment.

Development planning objectives: growth, employment, price stability, equity and external balance.

Indicative planning uses targets and incentives rather than directives; Myanmar's plans are indicative.

Myanmar's economy depends heavily on agriculture, natural gas, jade and garments.

Agriculture supports most employment; rice and pulses are major exports.

Natural gas exports dominate official export earnings; jade and minerals are significant but poorly taxed.

Garment exports create jobs, especially for women, and depend on EU and Japanese markets.

Remittances from migrant workers are a major source of foreign exchange.

Development constraints: infrastructure, electricity, credit access, skills, conflict and institutional weakness.

HDI = geometric mean of income, education and health indices; ranges 0 to 1.

Gini coefficient measures inequality; 0 = perfect equality, 1 = perfect inequality.

Poverty headcount ratio = share of population below the poverty line.

Harrod-Domar growth equation: g = s / v (savings rate divided by capital-output ratio).

Lewis model: rural surplus labour moves to industry, raising productivity and incomes.

Myanmar's development agenda: peace, prosperity, people, planet, partnership (MSDP pillars).

FDI, ODA, remittances and trade are the main external financing sources for development.

Sustainable development balances growth with resource use and environmental protection.

Growth vs development: growth is quantity, development is quality of life.

Rostow stages: traditional, preconditions, take-off, maturity, mass consumption.

Balanced vs unbalanced growth: balanced spreads investment; unbalanced concentrates on leading sectors.

Import substitution vs export promotion: Myanmar's garment sector shows export-led job creation.

FDI brings capital, technology and jobs; risks include profit repatriation.

ODA and concessional loans finance infrastructure; debt sustainability depends on debt-to-GDP and export earnings.

Myanmar's poverty is concentrated in rural and conflict-affected areas.

SDGs link growth to poverty, education, health and environment.

Development planning objectives: growth, employment, price stability, equity and external balance.

Indicative planning uses targets and incentives rather than directives; Myanmar's plans are indicative.

Myanmar's economy depends heavily on agriculture, natural gas, jade and garments.

Agriculture supports most employment; rice and pulses are major exports.

Natural gas exports dominate official export earnings; jade and minerals are significant but poorly taxed.

Garment exports create jobs, especially for women, and depend on EU and Japanese markets.

Remittances from migrant workers are a major source of foreign exchange.

Development constraints: infrastructure, electricity, credit access, skills, conflict and institutional weakness.

HDI = geometric mean of income, education and health indices; ranges 0 to 1.

Gini coefficient measures inequality; 0 = perfect equality, 1 = perfect inequality.

Poverty headcount ratio = share of population below the poverty line.

Harrod-Domar growth equation: g = s / v (savings rate divided by capital-output ratio).

Lewis model: rural surplus labour moves to industry, raising productivity and incomes.

Myanmar's development agenda: peace, prosperity, people, planet, partnership (MSDP pillars).

FDI, ODA, remittances and trade are the main external financing sources for development.

Sustainable development balances growth with resource use and environmental protection.

Growth vs development: growth is quantity, development is quality of life.

Rostow stages: traditional, preconditions, take-off, maturity, mass consumption.

Balanced vs unbalanced growth: balanced spreads investment; unbalanced concentrates on leading sectors.

Import substitution vs export promotion: Myanmar's garment sector shows export-led job creation.

FDI brings capital, technology and jobs; risks include profit repatriation.

ODA and concessional loans finance infrastructure; debt sustainability depends on debt-to-GDP and export earnings.

Myanmar's poverty is concentrated in rural and conflict-affected areas.

SDGs link growth to poverty, education, health and environment.