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The TEST Classification

This document provides a classification system for evaluating economic concepts and policies across four dimensions: type, elasticity, size, and time. It includes lists of examples for each dimension. For type, it lists different types of economic concepts such as inflation, unemployment, markets, goods, and schools of thought. For elasticity, it discusses factors that influence elasticity values and their economic implications. For size, it discusses how the magnitude or level of various economic variables impacts outcomes. For time, it discusses how time horizons influence equilibrium and policy effects.

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Sylvain
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50 views5 pages

The TEST Classification

This document provides a classification system for evaluating economic concepts and policies across four dimensions: type, elasticity, size, and time. It includes lists of examples for each dimension. For type, it lists different types of economic concepts such as inflation, unemployment, markets, goods, and schools of thought. For elasticity, it discusses factors that influence elasticity values and their economic implications. For size, it discusses how the magnitude or level of various economic variables impacts outcomes. For time, it discusses how time horizons influence equilibrium and policy effects.

Uploaded by

Sylvain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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EVALUATIVE COMMENTS

IN ECONOMICS

- The TEST Classification -

TYPE
ELASTICITY
SIZE
TIME

© 2019 - Dr. Sylvain Hours


Email: [email protected]
Wechat: sylvainhoursCN
Website: http://sylvainhours.wixsite.com/home
TYPE
Inflation: Anticipated/Unanticipated, Demand-Pull/Cost-Push
Country: Developed/Developing Country
Unemployment: Frictional/Structural/Cyclical/Classical Unemployment
Policy: Monetary/Fiscal/Supply-side, Expansionary/Contractionary
Economy of scale: Internal, external
Market failure: Public good, externality, information failure, market power, factor immobility
Money: Commodity money, fiat money, commodity-backed money, narrow, broad, cash, checkable
deposits, near-moneys
Policy instrument: Taxes & subsidies, property rights, nudges, direct provision, provision of
information, quotas, price control, regulation, privatization, nationalization, deregulation
Poverty: Absolute, Relative
Growth: Actual, Potential
Market Structure: Perfect Competition, Monopoly, Competitive Oligopoly, Collusive Oligopoly,
Monopolistic Competition, Monopsony
Efficiency: Economic, Productive, Allocative, Dynamic
Deficit financing: Money creation, borrowing from the banking/non-banking sector, borrowing from
domestic/foreign lenders
Price Discrimination: First-Degree, Second-Degree Third Degree
Good: Merit, demerit good, inferior, normal, Giffen, credence, search, information, substitute in
consumption/production, complement in production/consumption, derived demand, durable, non-
durable, necessity, luxury
School of thought: Classical, Keynesian
Objective: Profit maximization, sales maximization, sales revenue maximization, profit satisficing
Tax: Direct, Indirect, Specific, ad valorem, progressive, proportional, regressive
Cost: Implicit, explicit, fixed, variable, private, social, external
ELASTICITY
- Importance of the factors that influence the value of an elasticity (e.g. occupational mobility for
the PES of labour, the availability of substitutes in consumption for the PED, etc.)

- The Marshall-Lerner condition (the impact of a change in the exchange rate on the trade balance)

- Taxes and subsidies (e.g. tax incidence, impact on the equilibrium output, etc.)

- Effectiveness of fiscal and monetary policy (e.g. PED for money, PED for investment goods,
PEAD/PESRAS, etc.)

- The Laffer Curve (impact of a change in tax rate on tax revenue)

- Relationship between PED and TR

- The Prebisch-Singer hypothesis

- Backward bending individual supply curve of labour

- The kinked demand curve model

- Impact of collective bargaining and minimum wage on the level of employment

- Lerner Index (extent to which a price-making firm can abuse its dominant position)

- Size of a shortage/surplus under price control

- Wages differentials

- Transfer earnings and economic rent

- Types of goods (normal, inferior, necessity, luxury, complements, substitutes, ordinary, Giffen)
SIZE
Nb: The term “size” may also refer to “level”, “magnitude”, “value”, “intensity” or “degree”

- Barriers to entry e.g. (impact of potential competition on a firm’s strategy, desirability of large
firms, incentives to collude, contestability, soundness of privatization/deregulation, etc.)

- Leakages (e.g. size of the spending multiplier, effectiveness of demand-side policies, etc.)

- Spare capacity (e.g. impact of a macroeconomic policy in a Keynesian AS/AD model, demand for
investment goods, etc.)

- Trickle-down effect (desirability of progressive taxation)

- Time lags (e.g. fiscal policy, monetary policy, supply-side policy, multiplier effect, etc.)

- Elasticity (e.g. size of IE vs size of SE: ordinary vs Giffen goods, backward bending individual supply
curve of labour, etc.)

- Market/Government failure (e.g. government intervention is likely to be welfare improving if the


DWL is large and the inefficiencies caused by government intervention are small, etc.)

- Economies/Diseconomies of Scale/Scope (e.g. desirability of large firms, etc.)

- Rate of inflation/unemployment (the consequences of inflation depend on the degree of


inflation; some unemployment is natural in the economy so low unemployment is not a big deal)

- Tax rate (e.g. Laffer Curve, tax evasion/avoidance, etc.)

- Business/Consumer confidence (e.g. effectiveness of demand-side policies, relevance of the


accelerator effect, etc.)

- Firm (e.g. possibility of divorce of ownership from control, etc.)

- Industry (e.g. external economies/diseconomies of scale)


- Product differentiation (e.g. variety of products available to the consumers, competitive pressure
faced by suppliers, etc.)

- Non-price competition (e.g. market conduct of oligopolists, price stickiness, etc.)

- Budget deficit / Public Debt (e.g. crowding out effect, inflation tax, snowball effect, default risk,
etc.)
- Shift (e.g. relative size of 2 shifts to determine the overall impact on price or quantity, etc.)

- Incentives (e.g. incentives to collude, poverty trap, incentives to innovate, X-inefficiencies, etc.)
TIME
- Impact of duration of the time period considered on elasticities

- SR vs LR Equilibrium in Perfect Competition and Monopolistic Competition

- SR vs LR Equilibrium in a classical AS/AD model (impact of demand-side policies)

- SRPC vs LRPC (trade-off between government macroeconomic objective, impact of demand-side


policies

- Static vs Dynamic Efficiency

- Intergenerational equity (sustainable development)

- Production in the SR vs Production in the LR

- Short-Term vs Long-Term Unemployment

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