Tuesday, January 4, 2011

How To Remember Economics Defintions Effortlessly?

Why some economics students find it extremely hard to remember definitions?

(1) Memorising without understanding. It is a fact that most students are looking for an easy way out. While it is true that they can remember definitions faster via ‘blind memorising’, it is highly unlikely that they are able to retain what they have memorised. In some cases, one would have forgotten entirely what they had memorised hours ago while those who have photographic memory may be able to retain them slightly longer, perhaps days. The impact of such action is obvious. In exams, lecturers or examiners are often fed with wrong definitions. Some candidates provide the definition of monetary policy for fiscal policy or even supply side policy while in some situation use the inappropriate words or even left out certain key words
(2) Lack of appreciation. Some students may be able understand the terms, concepts or phrases but they just can’t retain it. This is because they fail to relate it to their personal life or events around them which can actually enforce learning and understanding. In short, candidates do not think out-of-box and they see everything as if it is textbook-like

(3) Too tired. This may not be a very significant reason but it does contribute to poor memory. Those who study last minute, and in fact 90% candidates fall into that category will choose to revise during wee hours where the brain should be laid to rest

How can a person remember so many definitions easily?

(1) Imagining a curve/ graph. Consider the definition of PPF (production possibility frontier). It is a curve (yes it is) that shows the combination of two goods (refer to the horizontal and vertical axis) that can be produced in an economy (the part where it concave from the origin shows an economy) if all resources are fully and efficiently utilised. Let’s take another example, say consumer surplus. It is the difference between what consumers are willing to pay (look at the part where demand curve intersects the vertical price axis) and the actual market price (now imagine the equilibrium price which is lower)

(2) Some common sense. Sometimes we cannot look at the definitions from ‘economics’ angle but rather ‘English’. Consider tradable pollution permit. What is permit? It means allowance and so pollution permit must be allowance to permit. Tradable means can be traded in market or bought and sold in the market. So in full it would be an allowance to pollute that can be bought and sold in the market. Now consider government failure. In layman term, it means government has failed as in failed to achieve their objectives. Tax onto cigarettes failed to reduce number of smokers or fail to raise revenue needed. In proper, it would be when government intervention to solve an economic problem leads to net welfare loss. Why net welfare loss? It brings more ‘bad’ than ‘good’ overall.

How about monetary policy? Here we have monetary as in MONEY. As such it must be related to interest rates. It is rather amusing when I see definitions like monetary policy is the manipulation of tax and government spending to influence movement of AD. Consider marginal revenue. Again understand word by word. What is marginal? It means every additional one. So marginal revenue must be additional revenue due to extra one unit of output sold. Simple isn’t it?? Ok, what about contestable market? First what is contestable? It means easy to contest or easy to compete. Put it together, it means a market which is easy to compete with one another and this can only happen when the barriers of entry and exit are low. So the official definition is a market where there are low barriers to entry and exit

These are just some examples from the non-exhaustive of list that I can think of. Good luck

No comments: