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MODULE 2 - Coggle Diagram
MODULE 2
THE EXCHANGE RATES
Let us to deal with international trade. It is like a comparison within the value of two different currencies. It is the price of a foreign currency.
It gives us the relative power of our currency, it indicates if we are strong or not.
Macroeconomics is also the study of the policy measures that the government uses to influence the overall economy. There are different policies in different fields.
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MONETARY POLICY
Based on inflation. It looks at the demand and supply of money and the effect on inflation. Expansive policy increases the available amount of money (increase inflation).
The opposite is the restrictive policy which reduces the money (decrease inflation).
FISCAL POLICY
Based on the current level of expenditure and taxation, the government can decide whether to increase expenditure and reduce taxation (EXPANSIVE POLICY) or decrease expenditure and increase taxation (RESTRICTIVE POLICY).
Macroeconomics goes beyond individual economic units, look at markets as a whole.
AGGREGATE SUPPLY
amount of output the economy can produce given the resources and technology available (Y). It is the overall supply produced by markets by using available resources (inputs), and the available technology. It is the GDP: aggregate total output.
AGGREGATE DEMAND
total demand for goods to consume (C), for new investment (I), for goods purchased by government (G), and for net goods to be exported abroad (X-IM).
BOOMS AND RECESSIONS
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The all economy is structured with different economic cycle, which can be either positive or negative.
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THE PHILIPS CURVE
AS curve is relatively flat and movements in AD drive changes in prices, output, and unemployment (the economy)
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GROWTH AND GDP
CAUSED BY
Increases in the efficiency or productivity of those resources. The efficiency is to reduce (exploit) resources at the best way possible at the minimum cost.
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GDP is the Gross Domestic Product, and the growth rate of the economy is the rate at which GDP is increasing.
Most developed economies grow at a rate of a few percentage points per year.
Looking at the GDP is nice in order to know the wealth of the country and to know how much the country is growing
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