Unit 1 : Fundamental Economics

Economics ----talk about --- income, investment, saving

- Famous philosophers : Plato & Aristotle

- studied 18th century
- Adam Smith ---- wrote “he Wealth of the Nations”
(First economics book of the world)

Meaning of Economics

Economics --- subject --- studies allocation of limited resources

to satisfy the unlimited demand of mankind in the most beneficial way.
(Study to find how to make people get every resources they want,
because the resources are limited.)

Importance of Economics
1. Personal & Household – Economics helps people to allocate limited resources to be
most beneficial in daily life
EX.
- student gets 30 baht allowance ---- has to allocate this money ---> get goods &
services
- you can choose company that gives you highest income

2. Producer – Economics helps producer make decision about what goods to produce,
how many labors or raw materials --- to keep production cost as low as possible
and how to set price

3. Country --- government use economics knowledge to help manage resources for
people, plan management plans to solve problems about unemployment, poverty
and high cost of living.

- For personal, economics helps us make decision about how to use the resources that
we have to get what we need, or to choose the better job for family
- For producer, it helps them make decision about what to produce, how much to sell,
how many workers or raw materials
- For country, it helps them make plans to solve poverty or economic problems

What is the meaning of “Resources are limited, but human demands are unlimited.”
- production factors in producing goods and services are available in limited quantity
but people’s demands are increasing because of population, so shortage or scarcity
might happen.

What are the results of resource scarcity?

- scarcity – is result of imbalanced allocation of limited resources.
- It will affect the choice that people make.
- It will affect the whole economy because production level will be lower and the price
of resources will be high. It will affect price of products and decision of consumers.
So scarcity will impact the whole country’s economy.
How can you adapt the knowledge of economics to your daily life?
- Every day we need to make choice. When you choose something, you lose another
thing. This is opportunity cost, so we need to choose anything that benefits you the
most.

Vocabulary

Opportunity cost ----- you choose 1 thing & lose another thing
consumption ---- you buy goods & services / eat /pay money
supplier ---- produce & sell something
demand ---- want
production ---- produce something
- Factors of production
1. land --- location of factory, farm EX. school
2. labor --- worker / human resources EX. teachers, janitors, librarians
3. capital ----- machine / equipment EX. air conditioners, white boards, com.
entrepreneur ---- owner of factory ---- get all production factors (land,labors,capitals)
scarcity --- people don’t have food, water
choice

microeconomic (small) ----- economic behavior in individual level (1 factory)

EX. price setting (price theory), product market
macroeconomic (big) ----- overall economic behavior of a country (whole Thailand)
EX. national income, money supply, consumption, saving, employment, investment,
public debt

employment ---- people have jobs

investment ---- give money to a company to do something
debt --- you borrow someone money

Unit 2 : Consuming Behaviors

Consumption
- means “utilization of goods and services to satisfy humans’ demand”
- important factor --- controls production & marketing

Principles of Good Consumption

1. Necessity ---- consumption must be truly living.
2 kinds of demands : needs & wants
- Need ---- necessary for living
- Want
2. Benefit and Safety
- goods & services --- useful --- NOT false advertising
EX. fast food, soft drinks ---- cheap but not good
3. Frugality
- consume product suitable for financial status
 Unit 3 : Financial Institutions
- income / expense / savings / investment

Financial Institutions --- institutions – conduct financial transaction & deposit or save and
provide credits.

Important Characteristics
1. intermediary ---- between saves & borrows
2. Bare the risk ---- from NPL or non-performing loan
3. Create financial liquidity --- issue cheques, draft ----- convenient, flexible, fast

Types of Financial Institutions

Classified by Characteristics

1. Banking Financial Institution

• take saving from people & offer savings as loan
EX. commercial banks, Government Saving Banks, Government Housing
Banks

2. Non-banking Financial Institution

• EX. Finance Companies, Asset Management Companies, Life Insurance
Companies, Foreign Currency Exchange Companies

Classified by Function

1. General Financial Institution

• functions --- related to financial transaction
EX. Commercial Banks, Security company, Asset Management Companies
2. Specific Financial Institution
• functions ---- specific financial transactions
EX. Government Housing Bank ----> gives credits for housing
Thai Credit Guarantee Corporation --- function is to guarantee the
small industries
Classified by Term of Assets

1. Financial Institution in money market

• trade assets --- not more than 1 year (short-term loan)
EX. Commercial Bank
Government Savings Banks
Bank for Agriculture

2. Financial Institution in capital market

• trade --- more than 1 year (long-term)
• use financial instruments
EX. government bonds
debentures
promissory notes

Classified by Types of Operation

1. Depositary Financial Institution

• take deposits from people & give loan
EX. Commercial Bank
Government Savings Banks
Bank for Agriculture

2. Financial Institution that has contract with source of investment fund

• create credit instrument in form of contract with depositors
EX. Life Insurance Company
• The capital raised ---- because invest on long-term project to get more
benefits

3. Financial Institution that issue Financial Instruments to raise the capital

• issue financial instrument EX. promissory notes, debentures --- high interest
rate

4. Financial Institution that provide credit

• allow credit or loan
• main funding ---- from investment of entrepreneurs or from selling stocks
and loans