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Macroeconomics (Trade (Currency (appreciation/depreciation (depreciation,…

- - - - depreciation
        
        increases exports due to low value of the currency
        
        can be achieved by expansionary monetary policy and expansionary fiscal policy
        
        inflation
        
        low interest rates
        
        increased money supply
        
        fiscal stimuli
      - appreciation
        
        decreases exports due to high value of the currency
        
        can be achieved through contractionary monetary policy and contractionary fiscal policy
        
        austerity
        
        high interest rates
        
        low inflation
        
        decreased money supply
  - - - Tariffs
        
        Tax on imports
        
        a tax or duty to be paid on a particular class of imports or exports.
      - Government subsidies
        
        Cheaper production than in foreign markets
  - - - Countries benefit from competitive advantage
      - Consumers have more options
      - Create employment opportunities
    - - Directly affects local producers and small businesses
      - Workers get low wages
      - Poor working conditions
- - - - Decrease Reserve Requirement
      - Increase discount rate
      - Purchase Gov't securities
      - Can cause inflation
    - - Increase Reserve Requirement
      - Decrease Discount Rate
      - Sell Gov't securites
  - - - Cons
        
        Could lead to inflation
        
        Debt and Debt crisis e.g. Greece
      - Pros
        
        Stimulates spending (multiplier effect)
        
        Rise in AD
    - - Pros
        
        Decrease debt
      - Contractionary fiscal policy is a form of fiscal policy that involves increasing taxes, decreasing government expenditures or both in order to fight inflationary pressures. Due to an increase in taxes, households have less disposal income to spend. Lower disposal income decreases consumption.
      - Cons
        
        Distort labor markets
    - - Government spending
      - Taxation
- - - - Substitution (buy cheaper goods that are similar)
      - quality (better quality --> better deal, less renewal)
      - new products
  - - - Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods".
    - - Cost push inflation is inflation caused by an increase in prices of inputs like labour, raw material, etc. The increased price of the factors of production leads to a decreased supply of these goods.
- - - - contractionary fiscal policy (austerity) during boom
      - expansionary fiscal stimuli during recession
    - - a phenomenon whereby a given change in a particular input, such as government spending, causes a larger change in an output, such as gross domestic produc