1. Basic Economics
Mr. PhakdhavattRungruangwitchakul
MBA, Northeastern Illinois University
Bachelor of Arts, Assumption University
panthanun@hotmail.com

2. Grading
• 50% on class attendance, class participation,
and class discussion
• 50% on final exam

3. Course Outline
1. Basic Economic
2. Demand and Supply
3. Basic Macroeconomic
4. 3 major concerns on Macroeconomic
5. Money
6. Trading
7. Market Integration - AEC

4. Economics
is
…………….
The study of how individuals and society choose to use the
scare resources that nature and previous generations have
provided.
The study of how human beings coordinate their wants and
desires, given the decision making mechanism, social customs,
and political realities of the society
(how to make a best choice)

5. Why study economic?
• To learn a way of thinking
• To understand society
• To understand global affair
• To be an informed citizen.

6. Microeconomics – The branch of economics that examines
the functioning of individual industries and the behavior of
individual decision making units – that is firms and households.
Macroeconomics – The branch of economics that examines
the economics behavior of aggregates income, employment, and
output on a national scale.

8. Scarcity – exists because individuals want more than
can be produced.
- means the good available are too few to satisfy
individuals’ desires.

9. Opportunity Cost – the benefit that you might have
gained from choosing the next best alternative.
- the benefit forgone of the next best alternative
to the activity you have chosen.
- “There ain’t no such thing as a free lunch.”

10. Marginal Cost (MC) –the additional cost over and
above costs already incurred.
Marginal Benefit (MB) – the additional benefit above
and beyond what has already derived.
MB > MC, Do it
MB < MC, Don’t do it

11. Demand– want, a willingness, ability to pay.
- quantities of a good that will be brought at various price
per unit of time.
The law of demand – change in price, change in quantity.
Price Quantity 
Price Quantity

12. Shift in demand curve
1. Change in society income
(Normal good & Inferior good)
2. Change in the price of related goods.
(Substitutes & Compliments)
3. Change in consumer tastes
4. Change in consumer expectation
5. Change in taxes and subsidies

13. Supply– how much a good a seller is willing to sell at
various prices, per unit of time, other things constant.
The law of supply – change in price, change in quantity supplied.
Price Quantity
Price Quantity

14. Shift in supply curve
1. Change in the price of inputs
2. Change in technology
3. Change in supplier expectations
4. Change in taxes and subsidies

15. Equilibrium – occurs when quantity demanded equals quantity
supplied, therefore there is no tendency for price to change.

16. Price $8.00 $8.50 $9.00 $9.50 $10.00 $10.50
Quantity Demand
3 3 1 0 0 0
8 7 6 3 2 1
6 5 4 3 0 0
10 9 7 6 4 2
Quantity Supply
0 1 2 3 4 6
2 3 3 4 6 7
0 1 2 3 5 6
1 1 2 2 3 5

17. • ( )
• ( )
•

18. 1. ( )
( )

19. 1: ( )

20. 2: ( )

21. 2. ( )
( )

22. 1: ( )

23. 2: ( )

24. 3.

25. 1:

26. 2:
•
•

27. Macroeconomics – The branch of economics that examines
the economics behavior of aggregates income, employment, and
output on a national scale.
Economic Growth – an increase in the total output of an economy,
mostly from 2 important sources;
the accumulation of capital and technological advanced.

28. The circular flow diagram

30. The 3 market areas:
1. The goods and services market:
Firms supply goods and service from the market.
Household, government, firms demand goods from the market.
2. The labor market:
Household supply labor.
Firm and government demand labor.
3. The money (financial) market:
Household supply funds.
Firms, the government, and the rest of the world engage in borrowing
(demand) and lending (supply).

31. Gross Domestic Product (GDP) – the total market value of all
final goods and services produced within a given period by
factors of production located within a country.

32. GDP





)





33. Gross National Product (GNP) -the total market of all final goods and services
produced by factors of production owned by a country’s citizen. (
GDP

34. The role of the government in the Macroeconomic
• Fiscal policy – government policies concerning taxes and
spending
• Monetary policy – the tools used by the Federal Reserve to
control the quantity of money, which is in turn affects interest
rate.

35. • Reserves (Actual reserve) -
• Required reserve ratio (RRR) - %
• Discount Rate -
• Open market operation -
How the Federal Reserve controls the money supply
If RRR  Supply  ability to create money by making loans
If RRR  Supply  ability to create money by making loans
Discount Rate  Commercial banks borrow  loans
Discount Rate  Commercial banks borrow  loans

36. 3 major concerns on macroeconomic :
1) Output growth
2) Unemployment
3) Inflation and deflation
Output growth
– the increase in nation’s aggregate output which is usually the
objective of the government.

37. 4 Phrases of business cycle:
1. Peak – when real GDP
reached its maximum
at full employment.
2. Recession- from a peak
down to a trough during
which output declines for 2 consecutive quarters, employment
fall.
3. Trough – when real GDP reached its minimum after falling
recession.
4. Expansion – from a trough up to a peak.

38. Unemployment rate
- the percentage of the labor force that is unemployed.

39. Population
16 years of age or older
Not in the labor
Labor force
force
Employed Unemployed

40. Inflation – an increase in the overall price level.
Deflation – a decrease in the overall price level.

41. Trade Surplus – the situation when a country exports more than
its import.
Trade Deficit – the situation when a country imports more than
its exports.

42. An overview of money
Money – means of payment or medium of exchange ,
a store of value, or a unit of account
A modern banking system
Banks borrow from individuals or firms with excess funds and
lend to those who needs fund.
Bank’s assets are its loans, Bank’s liabilities are deposits
Asset – Liabilities = Net Worth

43. Bank of Thailand (BOT)
1.
2.
3.
4.
5. (Clearing interbank payment)
6.
7.
8.
9.

44. (government revenue)
(government expenditure)
(government debt or public debt) (fiscal policy)
(financial administration)
1. (Allocation Function)
2. (Distribution Function)
3. (Stabilization Function)

45. 1.
2.
3.
-
-
-

46. (Budget)
1. (Surplus Budget)
2. (Balanced Budget)
3. (Deficit Budget)

47. Exchange rate
The ration at which two currencies are traded.
The price of one currency in terms of another.
Trade Barriers:
1. Tariff – a tax on import
2.Export Subsidies – Government payments made to domestic
firms to encourage exports
3. Dumping – a firms sale of products on the world market at
prices below its own cost of production
4. Quota – a limit on the quantity of imports

48. Economic Integration
European Union (EU)
US –Canadian Free Trade Agreement
North America Free Trade Agreement (NAFTA)
Asean Economic Community (AEC)
Asean
, , , , , , , , ,
Euro Zone
,

49. • AEC Blueprint AEC
• AEC
single market)
free flow)

50. • AEC
ASEAN)