A summary of the entirety of Theme 2 of the Edexcel/Pearson A Level economics specification. Based on the book 'Edexcel AS/A level Economics, 6th Edition' by Alain Anderton. A* Grade Analysis & Evaluation points included. Includes all necessary diagrams and variations, with short explanations. Deta...
Full revision notes for Edexcel Economics A Paper 2 Macroeconomics
All for this textbook (60)
Written for
Durham University (DUT)
Economics
Principles of Economics (8ECO/02)
All documents for this subject (2)
1
review
By: jinhaoeric • 9 months ago
Seller
Follow
nikhil11
Reviews received
Content preview
Economics Principles of Economics Nikhil Patel
Macroeconomic Essentials
Background:
The foremost single measure of how an economy performs is the aggregate
level of income, or aggregate output, or aggregate expenditure, which ALL
MEAN THE SAME THING.
Incomes are paid out to factors of productions, which are employed by firms
to produce goods and services.
This output then reaches the market for people to buy, and this works as a
cycle.
However firms way not use all available production factors to produce output,
and therefore factors of production are left idle as unemployment.
Also people may not buy all the goods and services available and there will be
an excess supply.
Nominal figures are ones that have been converted into a common
currency to make them comparable.
ENDOGENOUS Variables are ones that change due to a relationship within a
model. They can be viewed as dependent variables. This type of variable is
generally predictable in change, with respects to changes in other variables.
An example is the equilibrium price of a good from supply and demand.
EXOGENOUS Variables are ones that affect a model of some sort, WITHOUT
being affected by it. They are outside of the model.
For example say tax paid is modelled by Tax (t) = 0.3 x Income (Y)
Here, t is endogenous and Y is exogenous.
Circular Flow of Income:
The inner circle shows that households grant
firms with the production factor of labour.
In turn they consume goods with their labour
income.
This is called the Barter Economy.
The outer circle shows that the inner real flow
of labour and goods is financed by a monetary
flow of income payments from firms to
households and then the spending of
households’ income payments on the firms’
goods.
If households save part of their income then there is a leakage from the
circular flow. Taxation is also a leakage.
Similarly, investment (firms increasing their productive capacity NOT
stocks/shares etc) will be an injection into the circular flow.
Exports are also injections, whilst imports are leakages.
Govt. Expenditure is an injection, such as transfer payments.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller nikhil11. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.18. You're not tied to anything after your purchase.
