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The National and International
AS Economics: Unit 2…read more

Slide 2

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Macroeconomic Objectives
Government targets for the economy
Economic Growth: The percentage
increase in Real GDP over one year
Low Unemployment: Unemployment rate
is defined as the % of the working
population who are without a job but who
are actively seeking/willing to work.
Low and stable Inflation: Inflation is the %
increase in general price levels in one year
Balance of Payments Surplus: A record of
the flow of money between the UK and the
rest of the world. (The surplus is more
exports than imports)…read more

Slide 3

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Economic Growth
The percentage increase in real GDP in
one year
Real GDP= Gross Domestic Product. The
Value of all final output produced in an
economy in a year, with the effects of
inflation stripped out.
GDP per capita: Population/Real GDP
gives an indication as to the standard of
living in an economy…read more

Slide 4

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Why is it difficult to gain an accurate
measurement of GDP?
Unrecorded Economic Activity: This is
where there are no records of the output
because they are undeclared. This is
particularly present for example with cash
in hand jobs.
Non-Marketed Output: Output is again
not recorded, but this time because no
money has been exchanged. E.g. DIY and
Public Services: It is extremely difficult to
put a market price on services such as the
Externalities: Value of the output does not…read more

Slide 5

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Uses of Real GDP Statistics
Calculating the Living Standards of a
Comparing year on year to assess the
performance of an economy
Comparing between countries…read more

Slide 6

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Economic Growth (2)
The UK government aims for sustained
(long term) economic growth.
Increases in AD generally mean a short
term increase, and they are easy to achieve.
However: policy conflicts, the amount of
spare capacity in the economy and
unpredictability (time lag) can make this
economic growth undesirable.
Increases in AS mean a long term increase.
There are no policy conflicts in this case,
but Supply Side Policies take a long time to
work.…read more

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