Please enable JavaScript.
Coggle requires JavaScript to display documents.
Macroeconomics - Coggle Diagram
Macroeconomics
Aims
Internal
Economic growth
indicated by
National income
GDP
Nominal vs real
GNP
can also be used to measure
SOL across time and space
Non-material
Limitations
Material
also measured by
Composite indicators
4 more items...
Sources
Actual
Potential
Impacts
+ve
-ve
Slow growth & recession
can be addressed by
Demand side policies
Expansionary FP
MP
i/r
QE
ERP
Depreciation
IPP
Supply side policies
Short run
FP
MP
Appreciation
IPP
Long run
Policies that raise quality and quantity of resources
Labour
Capital
Policies that facilitate technological progress
Sustainable economic growth
Advantages & disadvantages
can be achieved by
Achieving actual & potential growth
Policies that reduce environmental damage
Tax on goods that create pollution during production
Campaigns to encourage recycling and minimise waste
Policies that reduce depletion of resources
Subsidies on R&D in green technology
Legislation to prevent over-usage
Inclusive economic growth
Advantages & disadvantages
can be achieved by
Policies that reduce income inequality
Redistribution of income via progressive tax system
Direct subsidies for low income households
Upgrading of skills and retraining
Imposition of a minimum wage
Low unemployment rate
indicated by
Unemployment rate
types
Demand-deficient
remedied by raising AD
Structural
remedied by
Facilitating skills upgrading
Protectionist measures
Movement of resources
Frictional
remedied by
Providing information on job availability and requirements
Reducing unemployment benefits
Consequences
Price stability - low and stable inflation rate
indicated by
GPL
External
Favourable BOP
indicated by
BOP
Current a/c
Trade
Visible
Xrev
Mexp
Invisible
Unilateral transfers
Income flows
Capital and financial a/c
Short term capital flows
Hot money
Long term capital flows
FDI
Portfolio investments
in the future
1 more item...
Deficit
Worsening current a/c
due to
Rise in Dm
Fall in Pm
Rise in Px
Fall in Dx
Worsening capital and financial a/c
due to
Fall in I
Fall in i/r
Implications
on
Theory
AD & AS analysis
AD
comprised of
Consumption expenditure
Investment expenditure
Government expenditure
Net exports
AS
affected by
Cost of production
Up/downward shift
Productive capacity
Left/rightward shift
Multiplier theory, k
k=1/(MPS + MPM + MPT) = 1/(1-MPC)
Marginal propensity to consume
Marginal propensity to save
Marginal propensity to tax
Marginal propensity to import