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
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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