The Macro Economy

Balance of Payments

Unemployment

Protect the Environment

Economic Growth

Methods

Inflation

Seasonal

Cyclical

Frictional

Unemployment for short time moving from one job to another.

Seasonal workers are laid off for prolonged periods of the year

At times of recession it grows

Visible Trade

Invisible trade

physical goods

exchange of services

Demand-pull

Balance of trade

Visible exports - imports

Examples: ski instructors, holiday industry, lifeguards

Balance of Payments

capital account

Increase in GDP

Cost-push

total growth

-Rising consumer spending fuelled by tax cuts or low interest rates


-sharp increase in government spending


-rising demand for resources by firms


-booming demand for exports

rate of growth

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Solutions

Build roads and infrastructure

Loose monetary policy (lowering interest rates)

Expansionary fiscal policy

Can replace consumption spending during a recession

Will always exist in an economy.

average increase in GDP

-increase in taxation wage increases -rising costs of imports

Some people deliberately take an extended break

GDP increases or decreases each year

Taxation

Government agencies

Government regulation

Subsidies

Compensation

benefits of economic growth

Recycling

International targets

improved incomes

Money supply inflation

a range of legislation, regulations, guidelines and codes designed to help protect the environment

Congestion Charges

better living standards

development

increase in trade

increase employement

Gov. can transform industries to suit other seasons

E.g. Colorado ski/hike

problems with economic growth

Linked to the economic cycle

increased pollution

unsustainable growth

inflation

regional differences

is caused when households,firms and the government borrow more money from banks to fund extra spending. This adds to the money supply because there are now more bank deposits

increase in price of imports after Brexit

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Unemployment up to 8 weeks is considered to be frictional

Current Account

governments put taxes on those that damage the environment.

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If the real GDP / Capita Increases than on average people are having increased income

Surplus

Deficit

E.g. London Congestion charge 2003

Effects

Postive

Negative

Effects

negative

positive

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the aim of taxation is to ensure that the social costs resulting from production and consumption are met by those who impose him.

increased foreighn debt

Commodities

Manufactures

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loss of jobs overseas

Real GDP = GDP accounted for inflation

Primary goods

currency depreciation

limitations of GDP as measure of economic growth

Real GDP / Capita = Real GDP accounted for population

Gold

Rice

Grain

statistical errors

Cars

Capital machinery

e.g Czech republic 2003

Clothing

Financial

legal

increased consumption beyond PPC

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accounting

HR

Structural

Technological

can be solved with education and retraining

capital replacing humans

E.g. Detroit 1950-present

Regional

E.g. South Wales unemployment

Also depends on seasons

Regions reliant on declining sectors - depressed

Sectoral

Solutions

re-training and education

increased labour mobility

learn skills for new jobs

rigid labour mobility

little transferrable skills

in declining sectors workers are laid off

the hidden economy

population changes

Real GDP

Unequal distribution

e.g. South Wales declining coal mining industry

in some countries heavy taxes are put on petrol as it causes many environmental problems

living standards

Account of change in prices

Domestic shortages if too many goods are sold abroad

A rising exchange rate

the economic cycle

Solutions

Tight Monetary Policy

Contractionary Fiscal Policy

downturn

recession or depression

boom

recovery

rising exports will generate employment and economic growth

Increase interest rate

Increase taxes and lower public expenditure

A nation can build up foreign currency reserves or lend money overseas

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SUPPLY SIDE POLICY

Education + Train

increased labour mobility

deals with sectoral unemployment

Deregulation

increases production

increases supply

reduces time for production

Privatisation

increases competition

increases quality

increases quality and quantity of supply

A rising exchange rate which will raise the prices of exports resulting in a fall in demand in the future

If a country has a very high surplus it means that other countries deficits. This unbalanced situation could result in international stability.

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example: The Oil Price in the 1970's uploaded image

amazon robots

pay for damages or extra costs

pays for double glazing when building airport near houses

the government can offer grants tax allowances and other subsidies

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