Overview Booklet: AS AQA Econ2 'Macroeconomics'

This is a start-from-scratch guide to economics.

It explains all the long words, makes things easy and plain to understand.

Memorising this will help you gain a C/B grade. There is some A grade detail but not a lot - I wanted to keep it as a basic guide.

Hope it helps. I struggled with economics to start with, but having notes which relate to each other makes the whole topic much much easier.

Enjoy :)

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Preview of Overview Booklet: AS AQA Econ2 'Macroeconomics'

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Econ2: Macroeconomics
Economic Performance Indicators
Gross Domestic Product (GDP)
Gross Net Product (GNP)
Purchasing Power Parity (PPP)
Human Development Index (HDI)
The Economic Cycle
What is an economic cycle?
Output Gaps
Economic Growth
Benefits of Economic Growth: Why is it important?
The Multiplier Effect
The Accelerator Effect
The Circular Flow of Income
Aggregate Demand
Government Spending
Net Exports (Exports ­ Imports)
The Diagram for Aggregate Demand
Aggregate Supply
Short Run Aggregate Supply
Long Run Aggregate Supply
The Keynesian LRAS Curve
The New Classical Economist LRAS Curve
Determinants of Shifts in the LRAS Curve
Government Objectives
Measures of Unemployment
Types and Causes of Unemployment
The Balance of Payments
Cyclical Deficits
Structural Deficits
Government Macroeconomic Policies
Fiscal Policy (Demand Side)
Government Spending
Monetary Policy (Demand Side)
Interest Rates
The Money Supply
Exchange Rates
Supply Side Policies

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Economic Performance Indicators
Gross Domestic Product (GDP)
The gross domestic product is a measure of the total domestic economic activity. It is the sum of
incomes earned by the production of goods and services on the country's economic territory. It is
often positively correlated with the standard of living however it fails to represent how income is
being used (whether it is being used to improve quality of living).…read more

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Because of these weaknesses the HDI
scale is a relative measure not an absolute score.
The Economic Cycle
What is an economic cycle?
The economic cycle is a series of fluctuations in production or economic activity over several
months or years. Basically, it's how the GDP goes up and down. It can be shown like this:
This diagram shows an economic cycle. The
economic cycle includes booms and slumps. The
trend rate is the red line.…read more

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Economic Growth
Economic growth is an increase in GDP (Gross Domestic Product).
Benefits of Economic Growth: Why is it important?
Economic growth is an increase in output. This means the country is producing more, which is a
good thing. Also, a growth in GDP is associated with better living standards as there are more
goods/services for people to enjoy.…read more

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The Accelerator Effect
This principle describes that how business' expenditure on capital investment will be
influenced by the speed demand is growing for its products.
For example, remember Terry, who's just been made redundant because Vauxhall shut down its
plant? Well, he's started a business selling novelty flower pots. In fact, his novelty flower pots have
become the latest musthave garden accessory. Demand for Terry's product is growing fast.
The accelerator effect says Terry should increase production by working more hours, instead of
watching cricket.…read more

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Aggregate Demand
The sum of all planned spending on domestic output at a given general price level per period.
Aggregate demand is the total demand for all goods and services in an economy. It is made up of
Consumption, Investment, Government spending and the difference between exports and imports.…read more

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Expectations & business If a business thinks moving to a larger site will benefit the
plans company in the long term they are likely to go ahead with this
decision, depending on all of the other determinants.
Government Spending
The government spends money on defence, education, healthcare and transport. Different political
parties will spend more on different things depending on their political views. There are also
different economic approaches: the interventionist approach and the freemarket approach.…read more

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Aggregate Supply
The sum of all planned output companies are willing to produce at each price level.
Short Run Aggregate Supply
Short run aggregate supply (SRAS) is the output supplied in a time
period when the prices of inputs, including labour and raw
materials, remain unchanged.
The SRAS curve slopes upwards from left to right. This illustrates
how as the price level goes up a company can produce more
output.…read more


Dan Lindsay

cheers bbz xoxo

Oyejoke Balogun

thank you soooo much, i appreciate this.


This is a vey well written 18 page summary covering macroeconomics up to AS level. Covers the indicators well.


Thank you very much for this doc. very kind of you.

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