Application for essays - Macroeconomics Flashcards
Application for increase in money supply causing inflation (monetarist view)
Economist Kalecki:
‘If more money is in the economy, firms may decide to mark up their prices for their limited goods’
Criticism of GDP
‘ The welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP ‘
Simon Kuznets, the inventor of GDP methodology
What is the Bank of England’s annual inflation target?
2%
What is the current base rate of interest?
4.5% (May 2023)
What is the current inflation rate?
10.1% (March 2023)
What is an example of contractionary fiscal policy?
Bill Clinton increased taxes on high-income earners and reduced spending on defense
What is an example of contractionary monetary policy?
Thatcher raised interest rates to 17% in the early 80’s to control inflation (inflation was round 22% in 1980)
What is an example of expansionary monetary policy?
Quantitative easing
By buying up bonds, increase in price and so lower yield.
Less incentive to save in bonds so MPC increases (stimulates growth)
What is an example of expansionary fiscal policy?
Obama administration boosted government expenditure by $831 billion in the wake of the 2008 financial crisis
Why might changes in GDP resulting from increased/decreased exports be insignificant?
Net exports represent a small percentage of GDP even for countries such as China (<10% every year)
Why might a trade deficit be okay?
Post Keynesian Mosler states ‘The real wealth of a nation is all it produces and keeps for itself, plus all it imports, minus what it must export’
Where did the UK rank in HDI score in 2022?
18th
Evaluation for MLC
CAB may worsen originally due to time being a determinant of PED and so inelastic demand
Definition/quote for sustainability
‘Sustainable development meets the needs of the present without compromising the ability of future generations to meet their own needs’ Brundtland Commission
Quote linking economic growth and development
‘’Economic growth is often a necessary but not always sufficient condition for development’ - Amartya Sen
Application for inequality
1 in 9 people worldwide do not have enough food to eat
Who developed the theory of comparative advantage?
David Ricardo
What was China’s population in 2021?
1.4 billion
Trump’s tariff on China
In 2018, Trump imposed a 25% tariff on Chinese steel
Which components of AD are the greatest impacting figures and which are the smallest?
Consumption is the biggest determinant of AD
Net Exports are the smallest determinant of AD
How was expansionary fiscal policy used in the pandemic?
- VAT cuts in affected industries such as hospitality, from 20% to 5%
- Wage subsidies in the form of the furlough scheme
What was the budget deficit in 2020-21 (pandemic year) as a percentage of GDP?
14.5% of GDP
What is the national debt in the UK right now?
Around 100% of GDP
How much is the government set to pay on debt interest this year?
£116 billion
More than is spent on schools in the UK
