Policies To takle inflation AS/A2 Economics
A quick revision mindmap on the four macroeconomic policies to tackle inflation. USEFUL for scoring high marks in the 25 mark essays if described in more detail.
- Created by: Alex
- Created on: 13-10-13 18:35
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- Policies to Tackle Inflation
- Fiscal Policy
- Increase Taxes/ Decrease Govt Spending
- Less disposable income
- Consumer Spending falls
- Ceteris Paribus- AD (Price Level) Falls
- G falls and C falls. (AD=C+I+G+(X-M)
- Interest Rates
- ONLY FOR DEMAND PULL INFLATION
- Definition= Cost of Borrow/ Reward for Saving
- Increase Interest Rates
- Savings increase
- Consumer Spending Decreases
- Investment Decreases
- Fall in AD
- Negative Multiplier Effect
- Price Level Falls
- Diagram
- Supply Side Policies
- For Demand Pull OR Cost Push
- Causes Of Increased Prices
- Increase Unit cost of Labour
- Imports
- Commodities
- VAT
- Profit Margin
- Increase Unit cost of Labour
- Decrease Corp Tax
- Increase Subsidies
- Decrease Welfare Benefits
- Increase Education and Training
- Increase Technology
- Privatisation/ Deregulation
- Exchange Rate
- Interest Rate and Exchange Rate are positively Related
- Interest Rate Increases= Exchange Rate Increases
- Price of Exports Increase
- Exports decrease
- Price of Imports fall
- Imports Increase
- AD falls
- Price Level Falls
- Fiscal Policy
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