unit 2 macroeconomics n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Unit 2 Macroeconomics PowerPoint Presentation
Download Presentation
Unit 2 Macroeconomics

Loading in 2 Seconds...

play fullscreen
1 / 26

Unit 2 Macroeconomics - PowerPoint PPT Presentation


  • 141 Views
  • Uploaded on

Unit 2 Macroeconomics. The ‘Big’ Picture. What is it?. Macroeconomics considers the economy as a whole – this is the total amount of different goods and services produced by all businesses and the government sector Key performance indicators Objectives Policy instruments.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Unit 2 Macroeconomics' - zed


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
unit 2 macroeconomics

Unit 2 Macroeconomics

The ‘Big’ Picture

what is it
What is it?
  • Macroeconomics considers the economy as a whole – this is the total amount of different goods and services produced by all businesses and the government sector
  • Key performance indicators
  • Objectives
  • Policy instruments
what are objectives and instruments
What are objectives and instruments?
  • Objectives are the aims or goals of government policy
  • Instruments are the means by which these aims might be achieved
uk macroeconomic policy objectives
UK Macroeconomic Policy Objectives
  • Stable low inflation
  • Sustainable growth
  • Improvements in productivity
  • High employment
  • Rising living standards
  • Financial stability
p olicy instruments
Policy Instruments
  • Monetary policy –changes to interest rates, the money supply, access to credit and also changes to the value of the exchange rate
  • Fiscal policy – changes to government taxation, spending and borrowing
  • Supply-side policies designed to make markets work more efficiently
what sectors make up an economy
What sectors make up an economy?
  • Households
  • Firms
  • Government
  • International
the circular flow of income

The Circular Flow of Income

The interdependence of goods markets

and factor markets

the interdependence of goods and factor markets
The interdependence of goods and factor markets

FIRMS

(suppliers of goods and services,

demanders of factor services)

HOUSEHOLDS

(demanders of goods and services,

suppliers of factor services)

the interdependence of goods and factor markets1

£

£

Factor

services

Goods

S

S

PF2

P2

PF1

P1

D2

D2

D1

D1

QF1

Q2

QF2

Q1

Factor

services

Goods

£

£

The interdependence of goods and factor markets

(2)

Producer

supply

(3)

Factor

demand

P

P

Multiplier

effect

O

O

Q

Q

(4)

Factor

supply

(1)

Consumer

demand

the circular flow of income1

The circular flow of income

Consumption, injections, withdrawals and equilibrium

need a whole a4 page for this diagram
Need a whole A4 page for this diagram
  • Need it to be landscape
  • Start off on the far left side…..
  • Need lots of space for the diagram to ‘grow’….
slide12

Consumption of

domestically

produced goods

and services (Cd)

Factor

payments

The circular flow of income

Firms

Households

slide13

Export

expenditure (X)

Investment (I)

Government

expenditure (G)

BANKS, etc

ABROAD

GOV.

Import

expenditure (M)

Net

taxes (T)

Net

saving (S)

The circular flow of income

INJECTIONS

Consumption of

domestically

produced goods

and services (Cd)

Factor

payments

WITHDRAWALS

key terms

Key terms…

Injections = I + G + X

Withdrawals = S + T + M

government macro economic policies
Government Macro Economic policies…
  • Look at managing injections and withdrawals to allow a positive economic growth of 2% per year.
  • The Govt can achieve this either by
  • reducing withdrawals
  • or by increasing injections
national income

National Income

Measuring economic growth

national growth
National Growth
  • National Income = all incomes from FoP are added (from Firms to Households)
  • National Product = all g & s produced (by firms)
  • National Expenditure (AD) = all expenditure on output is added.
gdp v gnp
GDP measures the value of output produced within the domestic boundaries of the UK over a given time period.

GDP includes the output of the many foreign owned firms that are located in the UK following the high levels of foreign direct investment in the UK economy over many years.

GNP measures the final value of output or expenditure by UK owned factors of production whether they are located in the UK or overseas.

Many foreign firms have set up production plants in the UK whilst UK firms have expanded their operations overseas and become multinational (or trans-national) organisations.

GDP v GNP
key terms needed

Key Terms needed…..

Real & Nominal

nominal

Nominal

Nomianal or current GDP looks at the monetary value

slide24

Real

Real takes into account of inflation

homework for wednesday

News article – research an article from a reputable source:

  • BBC
  • Financial Times
  • Guardian
  • Independent
  • The Times
  • The Economist
  • Article must be on one of the following topics…
  • UK inflation
  • UK employment / unemployment
  • UK interest rates
  • UK economic growth
  • Analyse the key issues raised in the article.

Homework… for Wednesday