1.

1 LAW OF DEMAND
0.8

0.6
PRICES

0.4

0.2

0
0 0.2 0.4 0.6 0.8 1 1.2

QUANTITY(q)
CUSTOMER CENTRIC
 1.2

1
LAW OF SUPPLY
0.8

0.6
PRICES

0.4

0.2

0
0 0.2 0.4 0.6 0.8 1 1.2

QUANTITY
SELLER CENTRIC
 1.2
Chart Title

0.8
surplus

equilibrium
PRICES

0.6

0.4

shortage
0.2

0
0 0.2 0.4 0.6 0.8 1 1.2

QUANTITY(q)
 EQUILIBRIUM
1.2

surplus
0.8
PRICES

0.6 equilibrium

0.4

shortage
0.2

0
0 0.2 0.4 0.6 0.8 1 1.2

QUANTITY(q)
 1.2
EQUILIBRIUM

surplus
0.8 S>d
0.6 equilibrium
q
=
PRICES

S<d
0.4

shortage
0.2

0
=
q q
0 0.2 0.4 0.6 0.8 1 1.2

QUANTITY(q)
=
 1.2

1
LAW OF SUPPLY
0.8

0.6
PRICES

0.4

0.2

0
0 0.2 0.4 0.6 0.8 1 1.2

QUANTITY
 1.2
Chart Title

1 New
0.8
variety
Supply
increas
PRICES

0.6

0.4 e
0.2

0 q
0 0.2 0.4 0.6 0.8 1 1.2

QUANTITY(q)
 1.2
Chart Title

Preven
ts
0.8
PRICES

cancer
0.6

Supply
0.4

0.2
increa
0
0 0.2 0.4 0.6 0.8 1 1.2 se
q
QUANTITY(q)
 1.2
Chart Title

Ad
1

campai
0.8

gn
PRICES

0.6

0.4
Supply
0.2
deman
0
0 0.2 0.4 0.6 0.8 1
d
1.2

QUANTITY(q) decreas
q
e
 1.2
Chart Title

Labor
1

strike
0.8

Suppl
PRICES

0.6

0.4
y
0.2
decre
0
0 0.2 0.4 0.6 0.8 1
ase
1.2
q
QUANTITY(q)
The 256th couplet of Tirukkural,
which was composed at least 2000
years ago, says that "if people
do not consume a product or
service, then there will not be
anybody to supply that product
or service for the sake of
price"
The determinants of supply are:
1. Production costs: how much a goods costs to be
produced. Production costs are the cost of the inputs;
primarily labor, capital, energy and materials. They
depend on the technology used in production, and/or
technological advances. See: Productivity
2. Firms' expectations about future prices
Number of suppliers
 Banking sector

MONET
ARY
POLICY
 Lets
Follow the money
Fiscal and monetary economics go side by
side. If the government decides for
Keynesian stimulus, central bank’s hand
would be tied for any monetary stimulus to
keep inflation under control. That’s why
both fiscal policy and monetary policy have
to be synchronized for effective economic
 Macroeconomic theories
fightin manipulating the dema
g
inflatio Theori
n Quantitative easing
es
Roosevelt'
s New
Deal
Milton Friedman
1. control of money John Maynard Keynes
1. government
Margaret Thatcher expenditures.
financi
al
Both theories are a reaction to dep
 1.2
MONETARIST POLICY

surplus
0.8
8%
Interest rates

0.6
6% equilibrium

0.4 4%
shortage
0.2

0
0 0.2 0.4 0.6 0.8 1 1.2

QUANTI
TY
 POLICY
MONETARIST
GOVERNMENTS
SHOULD DO
NOTHING BUT
CONTROL
THE MONEY
SUPPLY
 1.2
MONETARIST POLICY
Nominal Interest rates
1

recession inflation surplus

0.8
8%

0.6
6% equilibrium

0.4 4%
shortage
0.2

0
0 0.2 0.4 0.6 0.8 1 1.2

QUANTI
TY
 1.2
Philips curve

b
0.8
Inflation rate

0.6

0.4
A
0.2

0
0 0.2 0.4 0.6 0.8 1 1.2

Unemployment rate