Introduction to macroeconomics

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  • Introduction to macroeconomics
    • Diference between Micro and macro
      • Micro - The study of decisions made at the level of individual consumers, firms and markets
      • Macro - the study of the economy as a whole i.e. how all the markets come together and affect economic growth, Inflation, u/e, and the balance of payments
    • The circular flow of income
      • Open economy = trade
      • Closed economy = no trade
      • M = imports T = tax       X= exports   S = saving     I = investment    G = government spending
      • Diagram of expenditure, goods and services, labour (FOPs) and Income/wages
    • SPICED - Strong Pound Imports Cheaper Exports Dearer
    • Injections and Withdrawals
      • If injections > withdrawals then the economy will grow but if withdrawals > injections the economy will contract and potentially be heading for a recession
      • An economy is in equilibrium if I = W (rates) aka equilibrium income or national income equilibrium
    • Economic indicators
      • Quality of Life indicators
        • Pollution
        • Literacy rates
      • They are a measure of economic performance and welfare. Important
        • A measure for acheiving government objectives
        • International comparison
        • Trends and forecasting
      • Non-economic indicators give a better picture of the standard of living


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