Economics Unit 2

Mindmap for Macroeconomics, Unit 2 AQA AS Economics

HideShow resource information
View mindmap
  • Economics Unit 2
    • Aggregate Demand
    • Aggregate Supply
      • Short Run
        • Shifts
          • Change in wage rates
          • Change in raw material prices
          • Change in tax (corporation tax for example)
          • Change in the rate of interest
        • Linked to national income analysis
      • Long run
        • Shifts
          • Raising skills levels
          • Technological advances
          • Increasing levels of immigration
          • Government policies = greater efficiency
          • Increase in investement
        • Linked to economic growth
    • Policies
      • Fiscal
        • Government spending & Taxation
        • Expansionary/ loosening
          • Rise in spending and/or fall in tax
          • Inflation
            • Lead to higher due to a rise in AD
          • Unemployment
            • Fall in short run/ Keynesian model
            • Classical view = only change if there is a change in production capacity
          • Economic growth
            • Lead to an increase in real GDP
          • Balance of payments
            • Deterioration of current account due to ore imports
        • Tightening
          • Rise in tax and/or fall in spending
      • Monetary
        • Monetary Policy Committee (MPC)
          • Target of 2% pa
        • Controls the rate of interest
        • Higher the rate of interest
          • Lower AD
          • Consumption decreases (borrowing is more expensive)
          • Less investment as less profitable due to rate of return
          • Housing decreases due to mortgage payments rising
          • Marginal Propensity to Save would rise as savings are more attractive
      • Supply side
        • Incentives to work
          • Marketeers: Reduce tax rates on high income earners to increase incentives for investment
          • Interventionist: Lower rates could make some people work less hours for the same money
        • Poverty trap
          • Marketeers: Some people would rather get state benefits rather than work for the same money
          • Interventionists: Cutting state benefits cause a grater poverty
        • Union power
          • Marketeers: Unions cause wages to be too high therefore greater unemployment
          • Interventionists: Employers would exploit labour and legislation alongside unions are there to stop that happening
        • Mobility of capital and labour
          • Marketeers: Free movement nationally and internationally including immigration
          • Interventionists: Grants should be given to companies to locate where there is high levels of unemployment
        • Education and training
          • Marketeers: The market would provide and ensure the level of education and training needed in the market.
          • Interventionists: Grants + subsidies should be given as it is under provided.
        • Entrepreneurship and investement
          • Marketeers: Increase incentive by reducing corp. tax and inheritance tax
          • Interventionalist: Offer a range of tax reliefs and provide subsidies to firms
        • Privatisation and deregulation
          • Marketeers: The government should only be involved when there is market failure
          • Interventionists: There should be privatisation of natural monopolies
    • Inflation
      • Cost push
        • Usually caused by cost of production increasing
      • Demand pull
        • Caused by an increase in AD, lead to a 'excess demand' therefore pull up prices
    • Unemployment
      • Types
        • Cylical
          • Relates to the economics cycle
        • Structural
          • Geographical/ skills in the wrong regions
        • Seasonal
          • Particular industries (tourism)
        • Frictional
          • Movement between jobs
      • Measurement
        • Claimant count (Job seekers allowance)
        • Labour Force survey
    • Economic Growth
      • Economic cycle
        • Peak/Boom: GDP is growing fast, consumption is high,  unemployment is low, high inflationary pressures, high investment
        • Downturn: Rate of growth of GDP begins to fall, investment and consumption slowing and leading to less inflationary pressures
        • Recession: Rate of growth is negative, unemployment will rise, low investment and consumption
        • Recovery: GDP begins to pick up, Investment and consumption begin to rise and unemployment begins to fall
      • Measured by Real GDP (Gross Domestic Product)
      • If the rate of growth is below 0 then the economy is in a recession
    • Balance of Payments
      • Current account
        • Made up of trade in goods and services, assets abroad and foreign aid
      • Capital account
        • Purchases and sales of assets the balance the payments account
    • Circular Flow of Income
      • Withdrawls
        • Savings
        • Taxation
        • Imports
      • Injections
        • Investement
        • Government spending
        • Exports
      • Firms pay: wages, rent, interest and profit. Consumers buy the product. Money goes through the loop
    • Exchange rate
      • Appreciation
        • Makes the pound more expensive therefore less competitive around the world economy
        • Imports would increase and exports would decrease
          • Current account deficit
      • Depreciation
        • Makes the pound cheaper therefore more competitive in the world economy
        • Imports would decreasing and exports would increasing
          • Improving the current account




This is a large mind map which covers all the requirements for the macro element of the AS exam. Students might find it useful to produce a similar one themselves or use this one to check their revision needs.



@davidsalter is this for any particular exam board or just a general mind map.  

Similar Economics resources:

See all Economics resources »See all Macroeconomic indicators resources »