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Unit 4: The macroeconomy - Coggle Diagram

- - - - GDP plus net income from abroad
  - - - The total output produced in a country
    - - To assess in a country
        
        What is spent
        
        What is earned
        
        What is produced
      - For
        
        International Organisations
        
        Economists
        
        Governments
    - - The income method
      - The expenditure method
      - The output method
  - - - Prices before taxes and subsidies
    - - Total
    - - Charged to consumers
    - - Include depreciation
- - - - Measured in terms of the prices operating in the year when the output was produced.
      - Can be misleading due to the value of GDP rising as a result of inflation, not of more goods and services being produced
    - - Nominal GDP x price index in base year/ price index in current year
      - To convert Nominal GDP to Real GDP the price index is used, known as a deflator and it measures the prices of products produces, rather than consumed.
  - - - Higher consumer confidence
      - Increase in government spending
      - Outward movement within the PPC
    - - Labour and entrepreneurs
        
        Natural rise in population
        
        Net immigration of people of working age
        
        Deregulation and privatisation
      - Land - discoveries of new oil fields or gold mines
      - Net investment - capital goods
    - - Increases productivity of factor inputs
      - More advanced education and training
      - More advanced healthcare
      - Technology advances
      - Fertilisers, irrigation and drainage schemes - land
      - PPC shifts to the right
      - LRAS shifts to the right, illustrating an increase in the economy's productive capacity
  - - - Opportunity cost
      - Current consumption will be reduced
      - Stress and anxiety
      - Workers may have to change their occupation and relocate
      - Depletion of natural resources
      - Pressure to come up with new ideas and work long hours
    - - Increase in goods and services
      - Raise living standards
      - Rise in employment
      - Products more internationally competitive
      - Increase business and consumer confidence
      - Increases tax revenue so more benefits can be given to the poor
- - - - Homemakers
      - Not considered part of the labour force
    - - The proportion of the population that are of working age and who are either working or actively seeking work
  - - - Search
      - Casual
      - Voluntary
      - Seasonal
    - - International
      - Technological
      - Regional
- - - - If a year is selected with unusually high inflation, subsequent percentage changes may come across as unusually low.
    - - Are the people selected representative?
      - Are the people accurately and truthfully recording spending - chocolate
    - - Quality bias
      - Shrinkflation
      - Sampling errors
  - - - Reduces the burden of debt
      - Prevents some unemployment
      - Stimulates output
    - - Whether it is accelerating or stable
      - Whether it has been expected
      - The rate of inflation
      - The cause of inflation
    - - Show leather costs
      - Fiscal drag
      - Menu costs
      - Discouragement of investment
      - An unplanned redistribution of income
      - Inflationary noise
      - A reduction in net exports
      - Inflation causing inflation
  - - - Increases in aggregate demand not matched by increases in aggregate supply
      - Causes
        
        Consumer boom
        
        Government spending
        
        Higher business confidence
        
        Increases in money supply
    - - Increases in cost of production
      - Increase in profit margins
      - Depletion of natural resources
    - - Fall in country's foreign exchange rate
      - They may interact and reinforce each other, developing an inflationary spiral
- - - - Takes part in international trade
      - Imports goods from other countries
      - Exports goods to other countries
      - Circular flow
        
        Factor payments
        
        Exports and government spending contributes to this
        
        Savings and direct taxes take away from this
        
        Consumer spending
        
        Investment makes a contribution
        
        Indirect taxes and imports leak from it
    - - Doesn't trade with other economies
      - Households -> Firms
        
        Factor services
        
        Consumer spending on goods and services
      - Firms -> Households
        
        Goods and services
        
        Factor payments
  - - - I + G + X = S + T + M
- - - - Total real GDP that producers in an economy are willing and able to supply at a given price level in a given time period.
    - - Long run (LRAS)
        
        Keynesians
        
        Shifts
        
        Net immigration
        
        An increast in the retirement age
        
        More women entering the labour force
        
        Net investment
        
        Discovery of new resources
        
        Land reclamation
      - Short run (SRAS)
        
        Features
        
        The cost effect
        
        The misinterpretation effect
        
        The profit effect
        
        Shifts
        
        A change in taxes on firms
        
        A change in factor productivity/ quality of resources
        
        Price changes in factors of production
        
        A change in the quantity of resources
    - - AD and AS curves intersect
  - - - Total demand for an economy's goods and services at a given price level in a given time period
    - - Investment
      - Government spending
      - Consumer expenditure
      - Net exports (exports - imports)
    - - Features
        
        The international effect
        
        The interest rate effect
        
        The wealth effect
      - Shifts
        
        A change in any non-price level influence on a component