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Macroeconomics - Coggle Diagram

- - - - Government should aim for unemployment rate of 3% (accounting for frictional unemployment)
    - - Government inflation target is 2%, measured with CPI
    - - Economic growth vs inflation
      - Economic growth vs current account
      - Economic growth vs the government budget deficit
      - Economic growth vs the enviroment
      - Unemployment vs inflation
        
        In the short run, there is a trade off between the level of unemployment and the inflation rate, illustrated in the Philips Curve.
  - - - Real GDP per capita is real GDP divided by population of the country
  - - - A base year is used, and then compares it to different years
        
        Index Number explained here - https://www.youtube.com/watch?v=A5E_UpNchZE
  - - - GDP doesn't give indications of distribution of income - doesn't reflect inequality in a society
      - Large hidden economies, such as black market, which are not accounted for in the GDP
      - GDP gives no indication of welfare. Other measures such as the happiness index might be used to compare living standards in conjuction with GDP.
- - - - Positive effect of globalisation - as foreign workers enter richer countries e.g UK, USA, they often will send back money to their home countries, reducing inequalities in their countries
  - - - absoloute advantage when the a country production of a good uses fewer resources and a lower cost than another country
      - comparative advantage - when a country can produce a good at a lower opportunity cost than another country, meaning they give up producing less of another good than another country
      - countries specialise where they have comparative advantage, increasing economic welfare