AS Economics. Introductory Macroeconomics. Sixth Form pre-reading

Size: px
Start display at page:

Download "AS Economics. Introductory Macroeconomics. Sixth Form pre-reading"

Transcription

1 AS Economics Introductory Macroeconomics Sixth Form pre-reading

2 National income National income (Y) = money value of goods and services produced in an economy over a period of time, usually one year. National income is the main measure of macroeconomic performance the goods and services produced provide economic welfare/satisfy wants, thus dealing with the economic problem of scarcity. Measuring national income in reality is quite difficult so the government uses a series of approximations, the most common of which is: Gross Domestic Product (GDP) = money value of total output produced by factors of production based in the UK over a period of time, usually a year. You will learn other measures of National Income in your classes, but for now learn the definition of GDP. Circular flow of income A simple model of the macroeconomy designed to help economists understand how the level of national income is determined. In its simplest form, there are two groups active in the economy Households = owners of factors of production who supply these factors to the firms so that the firms can produce goods and services. The factors are paid (rent, wages, interest & profit) for their work providing income to the households, which they use to buy goods and services from the firms to satisfy their wants. Firms = organisations (companies, partnerships, etc) that hire the services of factors of production to produce goods and services for sale to the households. The two groups are linked to create a production line of factor inputs and product outputs (dotted lines on diagram). The flow of money that accompanies this production is comprised of household income and expenditure (solid lines on diagram).

3 rent, wages, interest & profit (Y) (2) land, labour, capital & enterprise HOUSEHOLDS FIRMS goods & services (1) (3) expenditure on goods & services (C) The value of output produced in this economy can be measured in three ways National output = value of goods and services flowing from the firms (measure at point 1) National income = value of rent, wages, interest and profit paid to households (measure at point 2) National expenditure = value of spending by households on goods and services (measure at point 3) The value obtained should be the same for each method so national output = national income = national expenditure This very simple model of the economy will always be in equilibrium with a constant level of national income circulating between the households and firms. To make the model more realistic and useful, it is necessary to introduce injections and leakages, which are accompanied by an increase in the number of active groups in the economy. This will be covered in your classes.

4 The objectives of macroeconomic policy There are four main objectives of macroeconomic policy Full employment/low unemployment unemployment is a waste of scarce resources so the more people working, the higher the economy s output and the better living standards will be. Stable prices/low inflation inflation generates undesirable effects like a loss of international competitiveness, income redistribution, etc. Low inflation (eg 2.0% pa) is generally felt to be desirable as it promotes economic confidence, without producing the damage associated with high inflation. Economic growth growth generates more output to satisfy more wants to boost welfare, but rapid growth carries possible problems like resource depletion and resource degradation. Balance of payments equilibrium the government aims for the total value of money coming into the economy from things like exports to be at or around the total value of money leaving the economy to pay for imports. A sustained balance of payments deficits (where the cost of imports exceeds the income from exports) need to be avoided to prevent the accumulation of debt to other nations. The country needs to live within its means internationally. Governments have placed different emphasis on these objectives. Keynesians (1950 s and 1960 s) full employment was main objective. Monetarists ( ) stable prices were the main focus. Since 2010 the coalition government has prioritised the reduction in government debt over the four main macroeconomic policy objectives. In addition, because the economy has been in a period of low growth since 2008, most economists would argue that the government is now more concerned about growth than stable prices / inflation. In addition to the above four objectives, governments also strive to improve aspects of the domestic economy, such as labour productivity. Conflicts of policy Policy conflict = when two or more objectives are mutually exclusive. Common policy conflicts Growth and stable prices. When the economy is growing strongly, it is likely that prices will rise.

5 Full employment and stable prices increasing aggregate demand (the total level of demand for goods and services) in the economy is likely to raise employment, but also prices Balance of payments equilibrium and stable prices reducing the value of our currency will make exports cheaper and therefore raise the level of exports. However, it will also increase import prices, putting pressures on inflation to rise. Policy trade-offs are necessary the government may have to compromise and seek satisfactory performances in the conflicting policy objectives rather than setting out to attain the best possible outcome for one objective. The environment is an additional source of policy conflict eg measures to protect the environment (taxes on fuel, pollution permits, etc) could clash with stable prices and economic growth. Policies to create more fuel efficiency could lead to job losses. Objectives can be complementary eg promoting economic growth should help achieve full employment. Constraints on policy In seeking to achieve its objectives, the government faces various constraints that limit its freedom. They include Limited number of policy instruments there are four main objectives, but only three main policy areas o fiscal policy = the manipulation of government spending and taxes in the budget o monetary policy = setting the base interest rate, and control of the money supply such as through Quantitative Easing o supply side policy = measures to increase efficiency of companies in the economy, by encouraging competitiveness through incentives and de-regulation.

2 0 0 0 E D I T I O N CLEP O F F I C I A L S T U D Y G U I D E. The College Board. College Level Examination Program

2 0 0 0 E D I T I O N CLEP O F F I C I A L S T U D Y G U I D E. The College Board. College Level Examination Program 2 0 0 0 E D I T I O N CLEP O F F I C I A L S T U D Y G U I D E College Level Examination Program The College Board Principles of Macroeconomics Description of the Examination The Subject Examination in

More information

CONCEPT OF MACROECONOMICS

CONCEPT OF MACROECONOMICS CONCEPT OF MACROECONOMICS Macroeconomics is the branch of economics that studies economic aggregates (grand totals):e.g. the overall level of prices, output and employment in the economy. If you want to

More information

The Circular Flow of Income and Expenditure

The Circular Flow of Income and Expenditure The Circular Flow of Income and Expenditure Imports HOUSEHOLDS Savings Taxation Govt Exp OTHER ECONOMIES GOVERNMENT FINANCIAL INSTITUTIONS Factor Incomes Taxation Govt Exp Consumer Exp Exports FIRMS Capital

More information

CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY

CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY Learning goals of this chapter: What forces bring persistent and rapid expansion of real GDP? What causes inflation? Why do we have business cycles? How

More information

EC2105, Professor Laury EXAM 2, FORM A (3/13/02)

EC2105, Professor Laury EXAM 2, FORM A (3/13/02) EC2105, Professor Laury EXAM 2, FORM A (3/13/02) Print Your Name: ID Number: Multiple Choice (32 questions, 2.5 points each; 80 points total). Clearly indicate (by circling) the ONE BEST response to each

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Suvey of Macroeconomics, MBA 641 Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Modern macroeconomics emerged from

More information

CHAPTER 5: MEASURING GDP AND ECONOMIC GROWTH

CHAPTER 5: MEASURING GDP AND ECONOMIC GROWTH CHAPTER 5: MEASURING GDP AND ECONOMIC GROWTH Learning Goals for this Chapter: To know what we mean by GDP and to use the circular flow model to explain why GDP equals aggregate expenditure and aggregate

More information

DO NOT WRITE ANY ANSWERS IN THIS SOURCE BOOKLET. YOU MUST ANSWER THE QUESTIONS IN THE PROVIDED ANSWER BOOKLET.

DO NOT WRITE ANY ANSWERS IN THIS SOURCE BOOKLET. YOU MUST ANSWER THE QUESTIONS IN THE PROVIDED ANSWER BOOKLET. SPECIMEN MATERIAL AS ECONOMICS 713/2 Paper 2 The national economy in a global context Source booklet DO NOT WRITE ANY ANSWERS IN THIS SOURCE BOOKLET. YOU MUST ANSWER THE QUESTIONS IN THE PROVIDED ANSWER

More information

CHAPTER 5. CIRCULAR FLOW MODELS

CHAPTER 5. CIRCULAR FLOW MODELS HAPTER 5. RULAR FLOW MODEL The behavior of a macroeconomic system is determined by the interactions of a great many actors and institutions. The first step in studying an economy is to simplify the picture

More information

What is fiscal policy? Fiscal policy is the use of government spending and taxation to influence the level of aggregate demand and economic activity

What is fiscal policy? Fiscal policy is the use of government spending and taxation to influence the level of aggregate demand and economic activity Macroeconomic policy Fiscal Policy What is fiscal policy? Fiscal policy is the use of government spending and taxation to influence the level of aggregate demand and economic activity List the main types

More information

The Economic Environment for Business

The Economic Environment for Business B. FINANCIAL MANAGEMENT ENVIRONMENT 1. The economic environment for business 2. The nature and role of financial markets and institutions The Economic Environment for Business What are the targets of macroeconomic

More information

7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Key Concepts

7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Key Concepts Chapter 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Key Concepts Aggregate Supply The aggregate production function shows that the quantity of real GDP (Y ) supplied depends on the quantity of labor (L ),

More information

With lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy.

With lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy. The Digital Economist Lecture 9 -- Economic Policy With lectures 1-8 behind us, we now have the tools to support the discussion and implementation of economic policy. There is still great debate about

More information

Chapter 10 Fiscal Policy Macroeconomics In Context (Goodwin, et al.)

Chapter 10 Fiscal Policy Macroeconomics In Context (Goodwin, et al.) Chapter 10 Fiscal Policy Macroeconomics In Context (Goodwin, et al.) Chapter Overview This chapter introduces you to a formal analysis of fiscal policy, and puts it in context with real-world data and

More information

S.Y.B.COM. (SEM-III) ECONOMICS

S.Y.B.COM. (SEM-III) ECONOMICS Fill in the Blanks. Module 1 S.Y.B.COM. (SEM-III) ECONOMICS 1. The continuous flow of money and goods and services between firms and households is called the Circular Flow. 2. Saving constitute a leakage

More information

General Certificate of Education Advanced Subsidiary Examination January 2013

General Certificate of Education Advanced Subsidiary Examination January 2013 General ertificate of Education dvanced Subsidiary Examination January 2013 Economics EON2 Unit 2 The National Economy Monday 28 January 2013 1.30 pm to 2.45 pm For this paper you must have: an objective

More information

The Aggregate Demand- Aggregate Supply (AD-AS) Model

The Aggregate Demand- Aggregate Supply (AD-AS) Model The AD-AS Model The Aggregate Demand- Aggregate Supply (AD-AS) Model Chapter 9 The AD-AS Model addresses two deficiencies of the AE Model: No explicit modeling of aggregate supply. Fixed price level. 2

More information

a) Aggregate Demand (AD) and Aggregate Supply (AS) analysis

a) Aggregate Demand (AD) and Aggregate Supply (AS) analysis a) Aggregate Demand (AD) and Aggregate Supply (AS) analysis Determinants of AD: Aggregate demand is the total demand in the economy. It measures spending on goods and services by consumers, firms, the

More information

The Keynesian Cross. A Fixed Price Level. The Simplest Keynesian-Cross Model: Autonomous Consumption Only

The Keynesian Cross. A Fixed Price Level. The Simplest Keynesian-Cross Model: Autonomous Consumption Only The Keynesian Cross Some instructors like to develop a more detailed macroeconomic model than is presented in the textbook. This supplemental material provides a concise description of the Keynesian-cross

More information

GOVERNMENT ECONOMIC OBJECTIVES AND POLICIES. Textbook, Chapter 26 [pg 317-328]

GOVERNMENT ECONOMIC OBJECTIVES AND POLICIES. Textbook, Chapter 26 [pg 317-328] GOVERNMENT ECONOMIC OBJECTIVES AND POLICIES Textbook, Chapter 26 [pg 317-328] Name: Class: Learning outcomes: Identify government economic objectives. Explain the main stages of the business cycle. Explain

More information

Government Budget and Fiscal Policy CHAPTER

Government Budget and Fiscal Policy CHAPTER Government Budget and Fiscal Policy 11 CHAPTER The National Budget The national budget is the annual statement of the government s expenditures and tax revenues. Fiscal policy is the use of the federal

More information

Measuring GDP and Economic Growth

Measuring GDP and Economic Growth 20 Measuring GDP and Economic Growth After studying this chapter you will be able to Define GDP and explain why GDP equals aggregate expenditure and aggregate income Explain how Statistics Canada measures

More information

UNIT 1 THE CONCEPTS OF MACROECONOMICS

UNIT 1 THE CONCEPTS OF MACROECONOMICS Macroeconomic Principles and Issues UNIT 1 THE CONCEPTS OF MACROECONOMICS Contents Page 1.1 Introduction to the Course 3 1.2 Introduction to this Unit 6 1.3 Gross Domestic Product 7 1.4 Demand, Supply

More information

CHAPTER 2: THE MARKET SYSTEM AND THE CIRCULAR FLOW

CHAPTER 2: THE MARKET SYSTEM AND THE CIRCULAR FLOW CHAPTER 2: THE MARKET SYSTEM AND THE CIRCULAR FLOW Introduction The problem of scarcity forces societies to make choices about what to produce, how to produce those goods, and who will receive the goods

More information

FBLA: ECONOMICS. Competency: Basic Economic Concepts and Principles

FBLA: ECONOMICS. Competency: Basic Economic Concepts and Principles Competency: Basic Economic Concepts and Principles 1. Define money (characteristics, role, and forms) and trace how money and resources flow through the American economic system. 2. Utilize decision-making

More information

ECONOMICS & THE BUSINESS ENVIRONMENT

ECONOMICS & THE BUSINESS ENVIRONMENT ECONOMICS & THE BUSINESS ENVIRONMENT FORMATION 1 EXAMINATION - AUGUST 2011 NOTES: You are required to answer Question 1. You are also required to answer any three out of Questions 2 to 5. (If you provide

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Econ 111 Summer 2007 Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The classical dichotomy allows us to explore economic growth

More information

Chapter 13. Aggregate Demand and Aggregate Supply Analysis

Chapter 13. Aggregate Demand and Aggregate Supply Analysis Chapter 13. Aggregate Demand and Aggregate Supply Analysis Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics In the short run, real GDP and

More information

Macroeconomics Machine-graded Assessment Items Module: Fiscal Policy

Macroeconomics Machine-graded Assessment Items Module: Fiscal Policy Macroeconomics Machine-graded Assessment Items Module: Fiscal Policy Machine-graded assessment question pools are provided for your reference and are organized by learning outcome. It is your responsibility

More information

Tutor2u Economics Essay Plans Summer 2002

Tutor2u Economics Essay Plans Summer 2002 Macroeconomics Revision Essay Plan (2): Inflation and Unemployment and Economic Policy (a) Explain why it is considered important to control inflation (20 marks) (b) Discuss how a government s commitment

More information

ECON 3312 Macroeconomics Exam 3 Fall 2014. Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

ECON 3312 Macroeconomics Exam 3 Fall 2014. Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. ECON 3312 Macroeconomics Exam 3 Fall 2014 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Everything else held constant, an increase in net

More information

Learner Guide. Cambridge IGCSE Economics

Learner Guide. Cambridge IGCSE Economics Learner Guide Cambridge IGCSE Economics 0455 Cambridge International Examinations retains the copyright on all its publications. Registered Centres are permitted to copy material from this booklet for

More information

Potential GDP and Economic Growth

Potential GDP and Economic Growth Potential GDP and Economic Growth CHAPTER17 C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 1 Explain the forces that determine potential GDP and

More information

MEASURING GDP AND ECONOMIC GROWTH CHAPTER

MEASURING GDP AND ECONOMIC GROWTH CHAPTER MEASURING GDP AND ECONOMIC GROWTH CHAPTER Objectives After studying this chapter, you will able to Define GDP and use the circular flow model to explain why GDP equals aggregate expenditure and aggregate

More information

Chapter 12: Gross Domestic Product and Growth Section 1

Chapter 12: Gross Domestic Product and Growth Section 1 Chapter 12: Gross Domestic Product and Growth Section 1 Key Terms national income accounting: a system economists use to collect and organize macroeconomic statistics on production, income, investment,

More information

ASSIGNMENT 1 ST SEMESTER : MACROECONOMICS (MAC) ECONOMICS 1 (ECO101) STUDY UNITS COVERED : STUDY UNITS 1 AND 2. DUE DATE : 3:00 p.m.

ASSIGNMENT 1 ST SEMESTER : MACROECONOMICS (MAC) ECONOMICS 1 (ECO101) STUDY UNITS COVERED : STUDY UNITS 1 AND 2. DUE DATE : 3:00 p.m. Page 1 of 13 ASSIGNMENT 1 ST SEMESTER : MACROECONOMICS (MAC) ECONOMICS 1 (ECO101) STUDY UNITS COVERED : STUDY UNITS 1 AND 2 DUE DATE : 3:00 p.m. 19 MARCH 2013 TOTAL MARKS : 100 INSTRUCTIONS TO CANDIDATES

More information

2.5 Monetary policy: Interest rates

2.5 Monetary policy: Interest rates 2.5 Monetary policy: Interest rates Learning Outcomes Describe the role of central banks as regulators of commercial banks and bankers to governments. Explain that central banks are usually made responsible

More information

A layperson s guide to monetary policy

A layperson s guide to monetary policy 1999/8 17 December 1999 A layperson s guide to Executive Summary Monetary policy refers to those actions by the Reserve Bank which affect interest rates, the exchange rate and the money supply. The objective

More information

WHAT IS ECONOMICS. MODULE - 1 Understanding Economics OBJECTIVES 1.1 MEANING OF ECONOMICS. Notes

WHAT IS ECONOMICS. MODULE - 1 Understanding Economics OBJECTIVES 1.1 MEANING OF ECONOMICS. Notes 1 WHAT IS Economics as a subject has assumed great importance in the field of social science. In our day to day life we use a lot of economic concepts such as goods, market, demand, supply, price, inflation,

More information

Chapter 11: Activity

Chapter 11: Activity Economics for Managers by Paul Farnham Chapter 11: Measuring Macroeconomic Activity 11.1 Measuring Gross Domestic Product (GDP) GDP: the market value of all currently yproduced final goods and services

More information

0 100 200 300 Real income (Y)

0 100 200 300 Real income (Y) Lecture 11-1 6.1 The open economy, the multiplier, and the IS curve Assume that the economy is either closed (no foreign trade) or open. Assume that the exchange rates are either fixed or flexible. Assume

More information

Answer: C Learning Objective: Money supply Level of Learning: Knowledge Type: Word Problem Source: Unique

Answer: C Learning Objective: Money supply Level of Learning: Knowledge Type: Word Problem Source: Unique 1.The aggregate demand curve shows the relationship between inflation and: A) the nominal interest rate. D) the exchange rate. B) the real interest rate. E) short-run equilibrium output. C) the unemployment

More information

AS Economics. Unemployment. tutor2u Supporting Teachers: Inspiring Students. Economics Revision Focus: 2004

AS Economics. Unemployment. tutor2u Supporting Teachers: Inspiring Students. Economics Revision Focus: 2004 Supporting Teachers: Inspiring Students Economics Revision Focus: 2004 AS Economics tutor2u (www.tutor2u.net) is the leading free online resource for Economics, Business Studies, ICT and Politics. Don

More information

Lesson 7 - The Aggregate Expenditure Model

Lesson 7 - The Aggregate Expenditure Model Lesson 7 - The Aggregate Expenditure Model Acknowledgement: Ed Sexton and Kerry Webb were the primary authors of the material contained in this lesson. Section : The Aggregate Expenditures Model Aggregate

More information

Economics 152 Solution to Sample Midterm 2

Economics 152 Solution to Sample Midterm 2 Economics 152 Solution to Sample Midterm 2 N. Das PART 1 (84 POINTS): Answer the following 28 multiple choice questions on the scan sheet. Each question is worth 3 points. 1. If Congress passes legislation

More information

2007 Thomson South-Western

2007 Thomson South-Western Thinking Like an Economist Every field of study has its own terminology Mathematics integrals axioms vector spaces Psychology ego id cognitive dissonance Law promissory estoppel torts venues Economics

More information

Assessment Schedule 2014 Economics: Demonstrate understanding of macro-economic influences on the New Zealand economy (91403)

Assessment Schedule 2014 Economics: Demonstrate understanding of macro-economic influences on the New Zealand economy (91403) NCEA Level 3 Economics (91403) 2014 page 1 of 10 Assessment Schedule 2014 Economics: Demonstrate understanding of macro-economic influences on the New Zealand economy (91403) Assessment criteria with Merit

More information

Politics, Surpluses, Deficits, and Debt

Politics, Surpluses, Deficits, and Debt Defining Surpluses and Debt Politics, Surpluses,, and Debt Chapter 11 A surplus is an excess of revenues over payments. A deficit is a shortfall of revenues relative to payments. 2 Introduction After having

More information

Introduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky

Introduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky Introduction to Macroeconomics 1012 Final Exam Spring 2013 Instructor: Elsie Sawatzky Name Time: 2 hours Marks: 80 Multiple choice questions 1 mark each and a choice of 2 out of 3 short answer question

More information

Economics 212 Principles of Macroeconomics Study Guide. David L. Kelly

Economics 212 Principles of Macroeconomics Study Guide. David L. Kelly Economics 212 Principles of Macroeconomics Study Guide David L. Kelly Department of Economics University of Miami Box 248126 Coral Gables, FL 33134 dkelly@miami.edu First Version: Spring, 2006 Current

More information

MEASURING A NATION S INCOME

MEASURING A NATION S INCOME 10 MEASURING A NATION S INCOME WHAT S NEW IN THE FIFTH EDITION: There is more clarification on the GDP deflator. The Case Study on Who Wins at the Olympics? is now an FYI box. LEARNING OBJECTIVES: By the

More information

Chapter 12. Aggregate Expenditure and Output in the Short Run

Chapter 12. Aggregate Expenditure and Output in the Short Run Chapter 12. Aggregate Expenditure and Output in the Short Run Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics Aggregate Expenditure (AE)

More information

Subject CT7 Business Economics Core Technical Syllabus

Subject CT7 Business Economics Core Technical Syllabus Subject CT7 Business Economics Core Technical Syllabus for the 2016 exams 1 June 2015 Aim The aim of the Business Economics subject is to introduce students to the core economic principles and how these

More information

Econ 303: Intermediate Macroeconomics I Dr. Sauer Sample Questions for Exam #3

Econ 303: Intermediate Macroeconomics I Dr. Sauer Sample Questions for Exam #3 Econ 303: Intermediate Macroeconomics I Dr. Sauer Sample Questions for Exam #3 1. When firms experience unplanned inventory accumulation, they typically: A) build new plants. B) lay off workers and reduce

More information

MEASURING GDP AND ECONOMIC GROWTH*

MEASURING GDP AND ECONOMIC GROWTH* Chapter 5 MEASURING GDP AND ECONOMIC GROWTH* Gross Domestic Product Topic: GDP 1) Gross domestic product is the total produced within a country in a given time period. A) market value of all final and

More information

SAMPLE PAPER II ECONOMICS Class - XII BLUE PRINT

SAMPLE PAPER II ECONOMICS Class - XII BLUE PRINT SAMPLE PAPER II ECONOMICS Class - XII Maximum Marks 100 Time : 3 hrs. BLUE PRINT Sl. No. Form of Very Short Short Answer Long Answer Total Questions (1 Mark) (3, 4 Marks) (6 Marks) Content Unit 1 Unit

More information

ECO 2251 PRINCIPLES OF MACROECONOMICS I Section: TEWA Fall Semester 2010

ECO 2251 PRINCIPLES OF MACROECONOMICS I Section: TEWA Fall Semester 2010 ECO 2251 PRINCIPLES OF MACROECONOMICS I Section: TEWA Fall Semester 2010 Instructor: Course Prerequisites: Office Hours: Phillip Mixon Assistant Professor of Economics Center for International Business

More information

ECON 1002: INTRODUCTION TO MACROECONOMICS

ECON 1002: INTRODUCTION TO MACROECONOMICS ECON 1002: INTRODUCTION TO MACROECONOMICS Course Type: Core Level: 1 Semester: 2 No. of credits: 3 Prerequisites: None COURSE DESCRIPTION This is an introductory Macroeconomics course and is one of the

More information

As you discovered in Chapter 10, unemployment and inflation impose costs

As you discovered in Chapter 10, unemployment and inflation impose costs Keynes and the Classical Economists: The Early Debate on Policy Activism LEARNING OBJECTIVES 1. Discuss why the classical economists believed that a market economy would automatically tend toward full

More information

Comparing Levels of Development

Comparing Levels of Development 2 Comparing Levels of Development Countries are unequally endowed with natural capital. For example, some benefit from fertile agricultural soils, while others have to put a lot of effort into artificial

More information

Edmonds Community College Macroeconomic Principles ECON 202C - Winter 2011 Online Course Instructor: Andy Williams

Edmonds Community College Macroeconomic Principles ECON 202C - Winter 2011 Online Course Instructor: Andy Williams Edmonds Community College Macroeconomic Principles ECON 202C - Winter 2011 Online Course Instructor: Andy Williams Textbooks: Economics: Principles, Problems and Policies, 18th Edition, by McConnell, Brue,

More information

Introduction to Macroeconomics

Introduction to Macroeconomics Introduction to Macroeconomics Macroeconomics the study of the economy as a whole We measure performance to track the development of the economy Why Measure Performance Helps the government develop tax

More information

Economics Proposal for CORE 2014 due by February 1, 2013

Economics Proposal for CORE 2014 due by February 1, 2013 Economics Proposal for CORE 2014 due by February 1, 2013 ------------------------------------------------------------------------------------------------------ Executive Summary: The Economics Curriculum

More information

Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions

Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions Name: _ Days/Times Class Meets: Today s Date: Macroeconomics, Fall 2007 Exam 3, TTh classes, various versions Read these Instructions carefully! You must follow them exactly! I) On your Scantron card you

More information

Each correct answer will score one mark. A mark will not be deducted for a wrong answer. Any rough working should be done in this booklet.

Each correct answer will score one mark. A mark will not be deducted for a wrong answer. Any rough working should be done in this booklet. *0299776260* ambridge International Examinations ambridge International dvanced Level ENMIS 9708/33 Paper 3 Multiple hoice (Supplement) May/June 2014 dditional Materials: Multiple hoice nswer Sheet Soft

More information

Households Wages, profit, interest, rent = $750. Factor markets. Wages, profit, interest, rent = $750

Households Wages, profit, interest, rent = $750. Factor markets. Wages, profit, interest, rent = $750 KrugmanMacro_SM_Ch07.qxp 11/9/05 4:47 PM Page 87 Tracking the Macroeconomy 1. Below is a simplified circular-flow diagram for the economy of Micronia. a. What is the value of GDP in Micronia? b. What is

More information

STRONG AND SUSTAINABLE ECONOMIC GROWTH

STRONG AND SUSTAINABLE ECONOMIC GROWTH STRONG AND SUSTAINABLE ECONOMIC GROWTH DEFINITION OF ECONOMIC GROWTH The government aims for a rapid but steady rise in the volume of goods and services produced from year to year. The aim is to achieve

More information

Note: This feature provides supplementary analysis for the material in Part 3 of Common Sense Economics.

Note: This feature provides supplementary analysis for the material in Part 3 of Common Sense Economics. 1 Module C: Fiscal Policy and Budget Deficits Note: This feature provides supplementary analysis for the material in Part 3 of Common Sense Economics. Fiscal and monetary policies are the two major tools

More information

3 Macroeconomics LESSON 8

3 Macroeconomics LESSON 8 3 Macroeconomics LESSON 8 Fiscal Policy Introduction and Description Fiscal policy is one of the two demand management policies available to policy makers. Government expenditures and the level and type

More information

CHAPTER 11. AN OVEVIEW OF THE BANK OF ENGLAND QUARTERLY MODEL OF THE (BEQM)

CHAPTER 11. AN OVEVIEW OF THE BANK OF ENGLAND QUARTERLY MODEL OF THE (BEQM) 1 CHAPTER 11. AN OVEVIEW OF THE BANK OF ENGLAND QUARTERLY MODEL OF THE (BEQM) This model is the main tool in the suite of models employed by the staff and the Monetary Policy Committee (MPC) in the construction

More information

Łukasz Goczek Macroeconomics I Class 3-4

Łukasz Goczek Macroeconomics I Class 3-4 CIRCULATION IN THE ECONOMY AND THE SYSTEM OF NATIONAL ACCOUNTS (ver. 27-02-2007) System of National Accounts (SNA) or National Account Systems (NAS) are statistical surveys designed to provide a systematic

More information

Inflation and Economic Growth Prospect in Ghana. A Paper Presented at the Chartered Institute of Economist Ghana s Seminar on the

Inflation and Economic Growth Prospect in Ghana. A Paper Presented at the Chartered Institute of Economist Ghana s Seminar on the Inflation and Economic Growth Prospect in Ghana A Paper Presented at the Chartered Institute of Economist Ghana s Seminar on the Theme: Environment, Investment and Economic Growth in Ghana @ Central University

More information

11-1. Framework of Analysis. Global Economic Considerations. Figure 12.1 Change in Real Exchange Rate: Dollar Versus Major Currencies.

11-1. Framework of Analysis. Global Economic Considerations. Figure 12.1 Change in Real Exchange Rate: Dollar Versus Major Currencies. Framework of Analysis CHAPTER 12 Macroeconomic and Industry Analysis Fundamental Analysis Approach to Fundamental Analysis Domestic and global economic analysis Industry analysis Company analysis Why use

More information

Macroeconomia Capitolo 7. Seguire l andamento della macroeconomia. What you will learn in this chapter:

Macroeconomia Capitolo 7. Seguire l andamento della macroeconomia. What you will learn in this chapter: Macroeconomia Capitolo 7 Seguire l andamento della macroeconomia PowerPoint Slides by Can Erbil 2006 Worth Publishers, all rights reserved What you will learn in this chapter: How economists use aggregate

More information

MACRO Unit 2 The UK Economy

MACRO Unit 2 The UK Economy MACRO Unit 2 The UK Economy The performance of the economy can have a major impact upon people s lives. It will influence the type of jobs people have and the goods and services available to them, and

More information

General Certificate of Education Advanced Level Examination June 2013

General Certificate of Education Advanced Level Examination June 2013 General Certificate of Education Advanced Level Examination June 2013 Economics ECON4 Unit 4 The National and International Economy Tuesday 11 June 2013 9.00 am to 11.00 am For this paper you must have:

More information

General Certificate of Education Advanced Subsidiary Examination June 2013

General Certificate of Education Advanced Subsidiary Examination June 2013 General ertificate of Education dvanced Subsidiary Examination June 2013 Economics EON2 Unit 2 The National Economy Friday 17 May 2013 1.30 pm to 2.45 pm For this paper you must have: an objective test

More information

Macroeconomics 2301 Potential questions and study guide for exam 2. Any 6 of these questions could be on your exam!

Macroeconomics 2301 Potential questions and study guide for exam 2. Any 6 of these questions could be on your exam! Macroeconomics 2301 Potential questions and study guide for exam 2 Any 6 of these questions could be on your exam! 1. GDP is a key concept in Macroeconomics. a. What is the definition of GDP? b. List and

More information

1. Firms react to unplanned inventory investment by increasing output.

1. Firms react to unplanned inventory investment by increasing output. Macro Exam 2 Self Test -- T/F questions Dr. McGahagan Fill in your answer (T/F) in the blank in front of the question. If false, provide a brief explanation of why it is false, and state what is true.

More information

SHORT-RUN FLUCTUATIONS. David Romer. University of California, Berkeley. First version: August 1999 This revision: January 2012

SHORT-RUN FLUCTUATIONS. David Romer. University of California, Berkeley. First version: August 1999 This revision: January 2012 SHORT-RUN FLUCTUATIONS David Romer University of California, Berkeley First version: August 1999 This revision: January 2012 Copyright 2012 by David Romer CONTENTS Preface vi I The IS-MP Model 1 I-1 Monetary

More information

Procedure: Adapted by the Maryland Council on Economic Education 1

Procedure: Adapted by the Maryland Council on Economic Education 1 Inflation Activity Lesson Description Students frequently ask the questions, If people don t have enough money, why doesn t the government just print more and give everyone enough to buy what they need?

More information

Economic Systems. 1. MARKET ECONOMY in comparison to 2. PLANNED ECONOMY

Economic Systems. 1. MARKET ECONOMY in comparison to 2. PLANNED ECONOMY Economic Systems The way a country s resources are owned and the way that country takes decisions as to what to produce, how much to produce and how to distribute what has been produced determine the type

More information

REVISED GCE AS & A Level Student Guidance Economics. Course Companion. Unit AS 2: The National Economy. For first teaching from September 2008

REVISED GCE AS & A Level Student Guidance Economics. Course Companion. Unit AS 2: The National Economy. For first teaching from September 2008 REVISED GCE AS & A Level Student Guidance Economics Course Companion Unit AS 2: The National Economy For first teaching from September 2008 For first award of AS Level in Summer 2009 For first award of

More information

Strategy Document 1/03

Strategy Document 1/03 Strategy Document / Monetary policy in the period 5 March to 5 June Discussed by the Executive Board at its meeting of 5 February. Approved by the Executive Board at its meeting of 5 March Background Norges

More information

The Fiscal Policy and The Monetary Policy. Ing. Mansoor Maitah Ph.D.

The Fiscal Policy and The Monetary Policy. Ing. Mansoor Maitah Ph.D. The Fiscal Policy and The Monetary Policy Ing. Mansoor Maitah Ph.D. Government in the Economy The Government and Fiscal Policy Fiscal Policy changes in taxes and spending that affect the level of GDP to

More information

New Approaches to Economic Challenges - A Framework Paper

New Approaches to Economic Challenges - A Framework Paper New Approaches to Economic Challenges - A Framework Paper 1. The global crisis was a wake-up call to policymakers around the world. Market and governance failures have led to the most pressing financial,

More information

Chapter 1. Why Study Money, Banking, and Financial Markets?

Chapter 1. Why Study Money, Banking, and Financial Markets? Chapter 1 Why Study Money, Banking, and Financial Markets? Why Study Money, Banking, and Financial Markets To examine how financial markets such as bond, stock and foreign exchange markets work To examine

More information

Reference: Gregory Mankiw s Principles of Macroeconomics, 2 nd edition, Chapters 10 and 11. Gross Domestic Product

Reference: Gregory Mankiw s Principles of Macroeconomics, 2 nd edition, Chapters 10 and 11. Gross Domestic Product Macroeconomics Topic 1: Define and calculate GDP. Understand the difference between real and nominal variables (e.g., GDP, wages, interest rates) and know how to construct a price index. Reference: Gregory

More information

5 Comparison with the Previous Convergence Programme and Sensitivity Analysis

5 Comparison with the Previous Convergence Programme and Sensitivity Analysis 5 Comparison with the Previous Convergence Programme and Sensitivity Analysis 5.1 Comparison with the Previous Macroeconomic Scenario The differences between the macroeconomic scenarios of the current

More information

Economics 101 Multiple Choice Questions for Final Examination Miller

Economics 101 Multiple Choice Questions for Final Examination Miller Economics 101 Multiple Choice Questions for Final Examination Miller PLEASE DO NOT WRITE ON THIS EXAMINATION FORM. 1. Which of the following statements is correct? a. Real GDP is the total market value

More information

Unemployment. AS Economics Presentation 2005

Unemployment. AS Economics Presentation 2005 Unemployment AS Economics Presentation 2005 Key Issues The meaning of unemployment Different types of unemployment Consequences of unemployment Unemployment and economic growth Recent trends in UK unemployment

More information

Principles of Economics

Principles of Economics A Lecture Presentation in PowerPoint to Accompany Principles of Economics Second Edition by N. Gregory Mankiw Prepared by Mark P. Karscig, Department of Economics & Finance, Central Missouri State University.

More information

Government s Role in Influencing Economic Growth and Productivity

Government s Role in Influencing Economic Growth and Productivity Government s Role in Influencing Economic Growth and Productivity PSMW 2015 8:50 AM, May 26, 2014 Stuart Newton Comptroller General of BC What is Economic Growth and Productivity? Economic Growth: - Gross

More information

GCE. Economics. Mark Scheme for January 2011. Advanced Subsidiary GCE Unit F582: The National and International Economy

GCE. Economics. Mark Scheme for January 2011. Advanced Subsidiary GCE Unit F582: The National and International Economy GCE Economics Advanced Subsidiary GCE Unit F582: The National and International Economy Mark Scheme for January 2011 Oxford Cambridge and RSA Examinations OCR (Oxford Cambridge and RSA) is a leading UK

More information

I. Introduction to Aggregate Demand/Aggregate Supply Model

I. Introduction to Aggregate Demand/Aggregate Supply Model University of California-Davis Economics 1B-Intro to Macro Handout 8 TA: Jason Lee Email: jawlee@ucdavis.edu I. Introduction to Aggregate Demand/Aggregate Supply Model In this chapter we develop a model

More information

Causes & Inflation. Causes of inflation 01/11/2010. A2 Economics, November 2010

Causes & Inflation. Causes of inflation 01/11/2010. A2 Economics, November 2010 Causes & Effects of Inflation A2 Economics, November 2010 Causes of inflation Inflation is a sustained increase in the general level of prices There are many possible causes of price inflation in an economy

More information

Expenditure Changing and Expenditure Switching policies. In an open economy setting, policymakers need to achieve two goals of

Expenditure Changing and Expenditure Switching policies. In an open economy setting, policymakers need to achieve two goals of World Economy Expenditure Changing 1 Expenditure Changing and Expenditure Switching policies In an open economy setting, policymakers need to achieve two goals of macroeconomic stability, viz. internal

More information

Exam practice: paper 1 (SL and HL)

Exam practice: paper 1 (SL and HL) Exam practice: paper 1 (SL and HL) Introduction to paper 1 Paper 1 has the same structure for both standard and higher levels. Paper 1: SL and HL Duration of paper 1 Focus and structure of paper 1 1 hour

More information

Thinkwell s Homeschool Economics Course Lesson Plan: 36 weeks

Thinkwell s Homeschool Economics Course Lesson Plan: 36 weeks Thinkwell s Homeschool Economics Course Lesson Plan: 36 weeks Welcome to Thinkwell s Homeschool Economics! We re thrilled that you ve decided to make us part of your homeschool curriculum. This lesson

More information