Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

Macroeconomic Indicators
data used to measure the performance of an economy
GDP (per capita) — Gross Domestic Product
the monetary value of all the finished goods and
services prod
...
g+s purchased by households
...

Claimant Account and Labour Force Survey
C
...

LFS asks 60,000 people whether they are unemployed
and whether they are looking for a job
...
some who
aren't not eligible for JSA + good for international
comparisons
...
above 100 e
...
102 = 2%⬆
% ⬇ push the figure below 100 e
...
98 = 2% ⬇ 

1

The Economic Cycle
The economic cycle is the natural fluctuation of the
economy between periods of expansion (growth) and
contraction (recession)
...
/neg
...
spend on G/S
Output (O) = total amount of G/S prod
...
total planned spending on all G/S prod
...


AD = C + I + G + (X-M)

consumption:
— level of income
— level of I
...
confidence
investment:
— the IR rate
— business exp
...
progress
— rate of change in income (accelerator effect)
gov
...
has
exports/imports:
AD inc
...
imports
saving = portion disposable income not spent on cons
...
R – effects export AD and effect
output = emp, incomes and profits of firms
• Recession in main trading partners affecting AD
for exports of goods and services
...
R or change in gov tax and spending e
...

big cuts in gov spending as part of fiscal austerity
multiplier process:
an initial change in expenditure may lead to a larger
impact on local or national income
...
the total value of G/S produced in an econ
...

2
...

4
...
g
...
relationship between the £level and output in LR
1
...

3
...

5
...

7
...

LRAS curve represents
the normal capacity level
of output of the economy

Keynesian AS curve: 


8

The Objectives of Government
Economic Policy
main objectives of government macroeconomic policy:
— increasing the E
...
external
performance of the econ, then the BOP on current acc)
BUT conflict arises when attempting to achieve


9

Economic Growth
def
...
R affecting competitiveness
• Cyclical fluctuations in national output
• Financial instability
• Volatility in world £ for key imports and exports
• Political instability / military conflicts
• Natural disasters
• Unexpected breakthroughs in the state of technology
AD/AS and PPC:

10

Inflation and Deflation
def
...
= full employment is when everyone willing to
work at the going wage rate is able to get a job
unemp
...

• Voluntary unemployment is defined as a situation
when workers choose not to work at the current
equilibrium wage rate
...

• Frictional unemployment/search unemployment,
occurs when workers lose their current job and are
in the process of finding another one
...

12

CAUSES
• Occupational immobilities, difficulties in learning new
skills applicable to a new industry, and technological
change
• Geographical immobilities, difficulty in moving
regions to get a job, e
...
there may be jobs in London,
but it could be difficult to move
• Technological change, if there is the development of
labour saving technology in some industries, then there
will be a fall in demand for labour
...

The current account is made up of:
- Trade in goods
- Trade in services
- Investment incomes
- Transfers
A surplus means that the total value of exports exceeds
the amount of imports, caused by UK econ strengths
(e
...
an improvement in labour prod)
A deficit means the total value of exports is less than
the total value of imports, may be caused by
weaknesses in UK econ (e
...
a rise in the rate of
inflation)
export is the sale of UK g/s to a foreign country
import is the purchase of foreign g/s for the UK econ


14

Fiscal Policy
def
...
g
...
P to control the level of AD
There can be problems with this due to: time lags, the
size of multiplier, fiscal crowding out and peoples
reaction to cuts/rises in taxation
Fiscal Policy and AS
• increase the skill levels of workers
• increase the productive capacity
• provide economic incentives to firms
• increase factor mobility
15

Monetary Policy
def
...
G
and inflation
Monetary Policy Committee (MPC) of the B of Eng
uses IR to achieve the gov’s target rate of inflation
changes in ER can affect the £ of X + M
WPIDEC AND SPICED
level of econ activity; as well as the BOP on C
...
aim to make markets operate more efficiently and
contribute to a faster underlying-rate of growth of real
national output
...
A
supply-side improvements need not necessarily rely on
gov policy initiatives BUT may originate in the business
sector independently of gov e
...
productivity
improvements, innovation and investment

17



---