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Summary Real world examples for A level economics ( Macroeconomics) $4.64   Add to cart

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Summary Real world examples for A level economics ( Macroeconomics)

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This document provides real-world examples you need to know for your A-level macroeconomics exam

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  • July 4, 2024
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  • 2023/2024
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Real World examples for Macroeconomics

Fiscal policy

Key areas of government spending in the UK

Healthcare ( appr 20%)
Social security - pensioners + children/ working age ( 23%)
Education ( 10%)

Sources of tax revenue

Income tax ( 25% )
NIC ( 18%)
VAT (15%)

Government debt
2023 100% of UK’s GDP

2024 Budget

A reduction in NIC from 10% to 8%
- On average + £450

Help with the cost of living crisis
- Additional £500 million

New investment for the NHS
- £2.5 billion in funding to make progress on getting waiting lists down
- £3.4 billion to deliver 2% annual NHS productivity gains by 2028-29.

Help for working parents
- Full child benefits to be paid to households where highest-earning parent
earns up to £60,000 - the current limit is £50,000

Cigarettes, alcohol and vapes
- Freeze on alcohol duty
- New tax on vaping products from October 2026
- Tobacco duty to go up £2.00 per 100 cigarettes at same time, to ensure
vaping remains cheaper

, Automatic stabilisers
OECD estimates show that automatic stabilisers in the UK tend to offset over
half of the impact of a shock to disposable income

Expansionary fiscal policy - 2020 recession

- The temporary cut to the rate of VAT on food, accommodation and
entry fees to attractions from 20% to 5%, introduced in July 2020
- Coronavirus Job Retention Scheme - government paid 80% of the
wages

Contractionary fiscal policy - 2023

- Increased corporation tax 19% to 25%
- Windfall taxes on energy companies



Income distribution and welfare

Gini coefficient (year ending 2022) - 0.357

Poverty

- 1 in 5 people in the UK were in relative poverty in 2021/22
- 17% in absolute poverty
- 4.3 million children are growing up in poverty



Monetary policy

Expansionary - Covid

- Cut in interest rates from 0.75% to 0.25%, and then further to 0.1%
- Quantitative easing - qe expansion by £200bn

Contractionary - Cost of Living Crisis

- The Bank of England's interest rate, Bank rate, has risen from 0.1% in 2021 to
5.25% in August 2023. Bank rate has remained at 5.25% until now.
- Quantitative tightening: The Bank of England's asset purchases (mostly
government bonds) under quantitative easing stand at £744 billion, down
from a peak of £895 billion.

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