Macroeconomics mindmap
- Created by: bigboyadam2
- Created on: 28-05-20 22:06
View mindmap
- Balance of payments
- Imbalance
- Surplus
- Can cause Demand pull inflation and could trigger protectionist policy abroad
- Surplus
- Macro Economics
- Aggregate Supply
- Natural Output Level - LRAS is the equilibrium level of potential output
- An economy can operate outside of its PPF if SRAS shifts outside of the LRAS curve (Positive Output Gap). However this is inflationary
- Aggregate Demand
- AD = Consumption + Investment + Government Spending + (Exports - Imports)
- Too great of AD within an economy is inflationary and can worsen the balance of payments as consumers import more goods and services, this can also then have a depreciating effect on the pound on Forex markets
- Total planned spending within an economy in a given period of time
- Government spending can have a crowding out effect of private sector investment, impeding on the incentive function of price a causing lower innovation in the private sector
- Government policy.
- Monetary policy - using monetary instruments to achieve macro economic objectives.
- Fiscal policy - this is part of governments overall policy which uses fiscal means (tax, spending, budgetary position) to achieve macro economic objectives.
- Direct taxation - this is when the tax can not be passed on to another party as you are the main benefactor of what is being taxed. E.g. Income tax is imposed on the income of an individual as they are benefiting from that income.
- Indirect tax are taxes that can be passed on to a third party through artificial inflation of prices. For example, VAT or excise duties on alcohol and cigarettes.
- Supply side policy aim to improve economic output through aiming to create more competitive markets through interventionist policy.
- The efficiency of intervention is often debated among economists.
- Government policy.
- National Income
- Dependent on the MPC, in increase in Gov spending can generate a proportionally larger increase in AD. This is the multiplier effect
- Measures the relationship between and change in a component of aggregate demand that causes a change in the equilibrium national income.
- Gross domestic product (GDP) is the total value of output in an economy and is used to measure change in economic activity. GDP includes the output of foreign owned businesses that are located in a country following foreign direct investment.
- Consumption modifier, investment multiplier, export multiplier
- Economic Growth
- GNI - the sum of value added by all producers within an economy and all income coming in from remittances abroad.
- Short run economic growth - Making use of spare capacity in the economy
- Long run economic growth - Shift in the macro economic PFF curve
- Recession in the UK is defined as 2 consecutive quarters of negative economic growth.
- Positive & Negative output gaps are when actual growth is below or above the long run growth rend
- Growth is caused by an increase in potential output, often caused by increased investment, labor productivity and capital revolution
- Price has three function, to signal, provide incentive and to allocate scarce resources
- Positives
- People lifted from poverty
- Better standards of living
- Increased tax revenue
- Increased economic and environmental welfare as communities strive for Eco friendly capital
- Negatives
- Scarce resources are depleted
- Can increase the income gap nationally and globally
- Countries with a resource curse can spiral into fast economic decline, such as Venezuela
- Aggregate Supply
- Current account
- Income balance
- Trade in goods/services
- Imbalance
- Deficit
- Slower growth, weaker currency, lack of competition
- Imbalance
- Surplus
- Can cause Demand pull inflation and could trigger protectionist policy abroad
- Surplus
- Reasons for international financial flows
- Speculation
- Individuals transferring funds, remittances
- Bank to bank lending
- Capital and financial account
- Balance of payments
- Macro Economics
- Aggregate Supply
- Natural Output Level - LRAS is the equilibrium level of potential output
- An economy can operate outside of its PPF if SRAS shifts outside of the LRAS curve (Positive Output Gap). However this is inflationary
- Aggregate Demand
- AD = Consumption + Investment + Government Spending + (Exports - Imports)
- Too great of AD within an economy is inflationary and can worsen the balance of payments as consumers import more goods and services, this can also then have a depreciating effect on the pound on Forex markets
- Total planned spending within an economy in a given period of time
- Government spending can have a crowding out effect of private sector investment, impeding on the incentive function of price a causing lower innovation in the private sector
- Government policy.
- Monetary policy - using monetary instruments to achieve macro economic objectives.
- Fiscal policy - this is part of governments overall policy which uses fiscal means (tax, spending, budgetary position) to achieve macro economic objectives.
- Direct taxation - this is when the tax can not be passed on to another party as you are the main benefactor of what is being taxed. E.g. Income tax is imposed on the income of an individual as they are benefiting from that income.
- Indirect tax are taxes that can be passed on to a third party through artificial inflation of prices. For example, VAT or excise duties on alcohol and cigarettes.
- Supply side policy aim to improve economic output through aiming to create more competitive markets through interventionist policy.
- The efficiency of intervention is often debated among economists.
- Government policy.
- National Income
- Dependent on the MPC, in increase in Gov spending can generate a proportionally larger increase in AD. This is the multiplier effect
- Measures the relationship between and change in a component of aggregate demand that causes a change in the equilibrium national income.
- Gross domestic product (GDP) is the total value of output in an economy and is used to measure change in economic activity. GDP includes the output of foreign owned businesses that are located in a country following foreign direct investment.
- Consumption modifier, investment multiplier, export multiplier
- Economic Growth
- GNI - the sum of value added by all producers within an economy and all income coming in from remittances abroad.
- Short run economic growth - Making use of spare capacity in the economy
- Long run economic growth - Shift in the macro economic PFF curve
- Recession in the UK is defined as 2 consecutive quarters of negative economic growth.
- Positive & Negative output gaps are when actual growth is below or above the long run growth rend
- Growth is caused by an increase in potential output, often caused by increased investment, labor productivity and capital revolution
- Price has three function, to signal, provide incentive and to allocate scarce resources
- Positives
- People lifted from poverty
- Better standards of living
- Increased tax revenue
- Increased economic and environmental welfare as communities strive for Eco friendly capital
- Negatives
- Scarce resources are depleted
- Can increase the income gap nationally and globally
- Countries with a resource curse can spiral into fast economic decline, such as Venezuela
- Aggregate Supply
- Current account
- Income balance
- Trade in goods/services
- Macro Economics
- Balance of payments
- Hot money
Comments
No comments have yet been made