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Edexcel A Level Macroeconomics 2024 Exam Comprehensive Study Guide
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Edexcel A Level Macroeconomics 2024Exam Comprehensive Study Guide
AD (def.)
Total level of planned real expenditure on g/s produced within
country in given time period
AS (def.)
Total supply of all g/s in economy
AD (eq.)
AD = C + I + G + (X - M)
Factors that affect AD: C
∝ disposable income
∝ employment
∝ 1/interest rate
∝ availability of credit
∝ confidence
∝ wealth
∝ inflation (short run)
∝ 1/inflation (long run)
Factors that affect AD: G
∝ size of public sector
∝ dependency ratio
∝ 1/(business cycle)
∝ 1/(national debt)
Factors that affect AD: I
∝ 1/interest rate
∝ access to credit
,∝ abnormal profit
∝ growth
∝ economic state of trade partners
∝ business confidence
Factors that affect AD: (X - M)
∝ 1/real income in domestic economy
∝ economic state of trade partners
∝ 1/(currency strength)
∝ degree of protectionism
∝ quality of X
Factors that affect SRAS
∝ 1/cost of factor inputs
∝ productivity of factor inputs
∝ stock of factor inputs
∝ mobility of factor input
Economic growth (def.)
Rise in real GDP
Rise in nation's productive capacity (PPF expansion)
Macro objectives
, Economic growth
Employment
Price stability
Balance of payments
Fiscal balance
Income equality
Environmental preservation
Unemployment (def.)
When people are of working age (16-67), willing and able to work
in next 2 week, have actively sought work in the last 4 weeks, but
cannot find employment
Claimant count (def.)
Total number of workers claiming job seekers allowance
ILO measure (def.)
% of workforce that is of working age, looking for work, but not
currently employed
Circular flow of economic activity
Conflicting macro objectives
Economic growth v. price stability
AD rises -> demand-pull inflation
Low unemployment v. price stability
Unemployment falls -> scarcity of labour -> wages rise -> CoP
increases -> cost-push inflation
Philips curve
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