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Economics Revision

Chapter 9: Macroeconomic Performance

Real GDP growth A
me asure of
t
he t
otal
output
expendit
ure or
i
ncome of
an
economy
aft
er
adjust
ing f
or
change s
in
the
p r
ice
level
.
T he
gr
ow t
h of
real
GD…

Page 2

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Economic cycle Fl
uct
uati
ons i
n t
he l
evel
of
economic
acti
vi
ty
as
me asured
by
GDP.
Typical
ly
ther
e ar
e f
our
stages
in
the
cycl
e:
recessi
on,
r
ecover
y,
boom &
slowdown
Human capital The
knowl
edge
& ski…

Page 3

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Shortterm capital flows Fl
ow s
of
mo ney
that
occur
t
o t
ake
ad vant
age
of
dif
fer
ences
in
count
ri
es'
int
erest
r
ates
&
changes
in
exchange
rat
es
someti
me s
ref
err
e d
to
as hot
money
Public sector net…

Page 4

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Purchasing power of money What
a
uni
t
of
cur
rency
w i
l
l
but
i
n t
erms
of
goods
& s
e r
vic
e s


Signalling function Changes i
n demand &
supply
of
goods &
ser
vices
are
si
gnall
ed t
o pr
oducers…

Page 5

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Key macroeconomic policy objectives:
A st
ea dy
&
sustai
nable r
ate
o f
econ omic gr
ow t
h
L ow
unemp loyment/
Full
emp l
o yme nt
L ow
rat
e
of
inf
lat
ion/
Pri
ce
stabil
it
y
A sat
isf
actory
balance of…

Page 6

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Higher levels of capital investment
o In bot
h
ma nufactur i
ng and
serv i
ce i
ndust
ries.

o T hi
s i
s bec ause
b u si
nesses
w i
ll
not
d emand such
high
nominal
rat
e s
of r
eturn on
pote ntial…

Page 7

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Risi
ng val
ue ofp
a pera
s set
sc
r eat
e sa n i
ncorrect
percept
iona
mo ngst
i
nvestor
st
hat
they'r
ew
e a l
thi
er
thant
h eyr eal
ly
are,
andc
and
i st
ort
spending
and
savings
habit
s.
Conti
nuedq…

Page 8

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The
con cept
of
the
acceler
ator
­ a t
heory
of
invest
me nt
that
r
elat
es the
tot
al
l
evel
of
invest
me nt
to
the
rate
of
ch ange
of
nati
onal
income
I
nvestmen t
i
s needed f
or
1.
R eplace
the…

Page 9

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A
large
outward
shif
t
in
AD
takes
the
equil
ibr
ium l
evel
of
nat
ional
out
put
beyond
ful
l
capaci
ty
nati
onal
income cr
eati
ng a
posit
ive
output
gap.
Thi
s woul
d t
hen
put
upward
pressur
e
on wage & r
aw…

Page 10

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mo r
e.
Wa ge cots oft
en ri
se when unemp loyment
is
low & al
so when people
expect
h i
ghe r
infl
a t
ion
s o
they
bid
for
higher
pa y
in
order
to pr
otect
t
heir
real

i
ncome s .

3)…

Comments

Scott Newall

ah so helpful cheers

Andy Reardon

Great Notes

10-costello-n

These notes are amazing

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