Macro Economic Revision Guide:
Economics F582
Define aggregate demand and describe the components of aggregate demand
Explain how the aggregate demand and the price level are related
Explain why the aggregate demand curve may shift
Define aggregate supply
Explain why the aggregate supply curve may shift
Define what is meant by equilibrium in the macro-economy
Explain what is meant by circular flow of income in a 2, 3 and 4 sector economy
Identify 3 injections
Identify 3 leakages
Define the multiplier and explain what it means using a diagram
Discuss how changes in aggregate demand and aggregate supply may affect output,
unemployment and inflation.
Define the macro economic objectives
Define sustainable economic growth
Define GDP
What the difference between GDP & Real GDP
Explain how economic growth is measure in the UK
Discuss the difficulties of their measurement
Explain the causes of economic growth
Discuss the costs, benefits and sustainability of economic growth
Define unemployment
Explain the 2 ways unemployment is measured in the UK
Discuss the difficulties of their measurement
Explain the causes of unemployment
Identify and explain the cost of unemployment to the individual and society
Identify and explain at least 3 advantages of low unemployment
Identify and explain 2 possible problems of low unemployment
Discuss the best solution to solving unemployment
Define inflation
Define the inflation rate
Explain the 3 ways inflation is measured in the UK
Discuss the difficulties of their measurement
Explain the 2 causes of inflation
Identify the different types of inflation
Identify and explain at least 3 advantages of stable inflation
Identify and explain 3 possible problems of high inflation
Discuss the best solution to controlling inflation
Outline the structure of the current account of the balance of payments accounts of
the UK economy
Explain the causes of a deficit or surplus on the current account of the balance of
payments
Discuss the consequences of a deficit or surplus on the current account of
the balance of payments
Define exchange rates
Explain how exchange rates are determined
Define international price competiveness
Identify and explain the impact of an appreciation of a currency on the macro
economy
Identify and explain the impact of a depreciation of a currency on the macro economy
Define fiscal policy
Define direct tax
Define indirect tax
Explain the difference between progressive, regressive, and proportional tax rates
Explain how tax can impact inequality
Identify the advantages of fiscal policy
Identify the disadvantages of fiscal policy
Discuss how effective fiscal policies are in achieving the government’s
macroeconomic objectives
Define monetary policy
Define interest rates
Use the transmission mechanism to explain the impact of interest rates on AD
Define “hot money”
Explain how interest rates and hot money impacts the current account
Identify the advantages of monetary policy
Identify the disadvantages of monetary policy
Discuss how effective monetary policies are in achieving the government’s
macroeconomic objectives
Define supply side policy
Give examples of different supply side polices in each market
What’s the difference between SRAS & LRAS
Identify the advantages of supply side policy
Identify the disadvantages of supply side policy
Discuss how effective supply side policies are in achieving the government’s
macroeconomic objectives
Discuss the reasons for, and consequences of, possible conflicts between policy
objectives;
Draw the international trade diagram
Define trade
Explain the advantages of trade
show an awareness of the changes in the UK’s pattern of international trade
Define what a tariff is
Show how a tariff works using a diagram
Identify and explain the advantages of using a tariff
Identify and explain the disadvantages of using a tariff
Define what an embargo is
Show how a quota works using a diagram
Identify and explain the advantages of using a quota
Identify and explain the disadvantages of using a quota
Define what an embargo is
Identify and explain the advantages of using an embargo
Identify and explain the disadvantages of using an embargo