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ECONOMICS THEME 2 - TOPIC 2.2 +2.3 - AD + AS , THE MULTIPLIER AND…

- - - - the business cycle
      - political influences
  - - - value of investment depreciates over time as stuff like machinery wears
    - - current economic state of the country
      - government cutting taxes to encourage investment
      - interest rate - high interest rates will increase the cost of borrowing, discouraging borrowing for investment purchases
  - - - demand for imported goods
      - supply for imported goods
      - global recessions
      - exchange rates
  - - - disposable income
      - marginal propensity to consume
      - marginal propensity to save
      - interest rates
- - - - changes in exchange rate
        
        a weakening of our currency will increase the cost of importing, once again increasing production costs. Causes a decrease in SRAS
      - changes in tax rates
        
        mainly corporation tax and it increases the costs of production
      - changes in costs of raw materials and energy
        
        an increase in costs of materials increase production costs and therefore SRAS will shift to the left
  - - - this argues that the economy can settle at an equilibrium that was below full employment
    - - this theory argued that the macroeconomy always adjusts rapidly to the full employment level of output and that monetary policy should be the prime stabiliser
    - - education + skills
      - government regulations
      - productivity
      - competition policy
      - tech advances
      - migration