macro examples

Question 1

uk monetary policy

Answer 1

2008 financial crisis:
cut interest rates from 5%-0.5%
QE of £375b (by 2012) was initially £75b

Question 2

uk fiscal policy

Answer 2

Covid 19
furlough scheme gov paid 80% wages
Cut VAT from 20% to 5% for hospitality, accommodation, and attractions
Government subsidized 50% of meal costs

Question 3

FDI

Answer 3

China in Africa
In 2017 kenya launched its $3.8b china funded train line linking nairobi to mombassa

Question 4

recent peak of inflation

Answer 4

11.1% in oct 2022

Question 5

crowding out

Answer 5

US debt was $33 trillion in 2023
interest rates rose effecting private sector borrowing
slowed investment in technology, infrastructure, and manufacturing, reducing long-term economic growth

Question 6

debt crisis

Answer 6

greece 2010-2018
government borrowed heavily to fund public sector wages, pensions, and social programs
misrepresented its financial data to meet EU criteria for joining the Eurozone in 2001
Investors lost confidence and stopped lending to Greece, leading to skyrocketing borrowing cost
GDP shrank by ~25% between 2008 and 2013.

Question 7

cyclical unemployment

Answer 7

2008 financial crisis
jobs in construction sector eg architects

covid 19
hospitality jobs

Question 8

structural unemployment

Answer 8

deindustrialisation + coal mines closing 1980s

ai replacing humans in customer service eg amazon for tracking

Question 9

asset price bubbles

Answer 9

dot com bubble 1997-2000 - stock prices of tech companies soared –> bankruptcy, stock market crash

housing bubble US 2005 - easy credit + speculation –> lost homes

Question 10

hysteresis

Answer 10

spain after 2009 eurozone crisis

Question 11

high debt to gdp ratio

Answer 11

japan - 257%
excessive spending to get out of recession