managing the UK economy

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  • Managing the Economy - 4 principals
    • Inflation
      • a sustained increase in the general level of prices
      • HIGH =
        • cost of living increase
          • wage price spiral
        • Low internation competitiveness
      • LOW =
        • deflation
          • people spend less in antricipation for prices to fall futher
            • even slower growth
        • slowing growth rate as spending declines
        • new tech increases efficiency
          • lower prices and lower inflation
        • competitive export prices
    • Reduced unemployed ment
      • high unemployment = increase taxes
      • paying out benefits but loosing income revenue
      • labour is derived. only need what you demand (measure of successfulness)
    • sustained eco growth
      • Real V Nominal
        • N = includes ifnlation
        • R = excludes inflation
      • leads to increased output and inflation
        • Inflation
          • a sustained increase in the general level of prices
          • HIGH =
            • cost of living increase
              • wage price spiral
            • Low internation competitiveness
          • LOW =
            • deflation
              • people spend less in antricipation for prices to fall futher
                • even slower growth
            • slowing growth rate as spending declines
            • new tech increases efficiency
              • lower prices and lower inflation
            • competitive export prices
      • increase living standards
      • desire both actual and potential
        • A = increase in output
        • P = increase in capacity
    • Balance of payments
      • want it at 0
      • want a surplus
        • small surplus = more int competitive
        • big suplus = a deficit in another country
        • your surplus = where you have comparative advantage

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