Notesale: Turn your study into money

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Higher Level
Using the expenditure method to calculate
nominal GDP
Two possible ways of presenting the data
...
C+I+G+(X-M)
2
...
e
...

Goods and services produced in country A by
foreign owned factors of production are not counted
in country A’s GNI
...


Marginal propensity to consume (MPC)
The percentage of income that a population will use
on consumption
...


Marginal propensity to import (MPM)
The percentage of income that a population will
spend on imports
...


Marginal propensity to withdraw (MPW)

Nominal GDP
Nominal GDP measures economic activity in
monetary terms, at current prices
...


Formulas for the multiplier:
A
...
These goods are given a
weight based on the percentage of income
consumers spend on them
...

The implications of the Short Run Phillips Curve:



If it is government’s main objective to
achieve low unemployment then this can be
done at the expense of higher inflation



B
...


Long Phillip’s Curve
Vertical
...
Increases in AD will lead to greater
inflation with no increase in output in the long run
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Marginal tax rate
Change in total tax paid
Change in Income
x 100

Average Tax Rate
Total tax paid
Income
x 100

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