Summary
Summary Macroeconomics A Level
- Module
- Economics A level revision
- Institution
- WJEC
Macroeconomics A Level detailed notes on Macroeconomics for A Level
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- High barriers to entry. Benefits of collusion will last in the long run.- Ineffective competition and market authority. Likely to get away with collusion.
- Consumer loyalty and inertia meaning that consumers don’t want to switch
- In a collusive monopoly, the market acts as a monopoly because of setting the same prices.
- When talking about pros and cons of collusive oligopoly, talk about the pros and cons of
monopoly as they act the same.
Macroeconomics
Macroeconomic theory:
Circular flow of income – model which shows major exchanges in the economy. It includes
withdrawals and injections.
Interest rates increase:
— Savings increase due to more return on savings
— Mortgage repayments increase so people have less money left to spend
— Loans become more expensive to pay back so less loans are taken out
— Exchange rate appreciates because of increased investment from foreign investors.
Government spending:
- Capital spending. Capital goods such as roads, schools, hospitals, infrastructure projects. This
will increase jobs and economic activity.
- Current spending. Day to day spending on public services such as wages for teachers,
resources for NHS.
, - Welfare spending. Benefits and pensions.
- Debt interest payments. Payments form the government to people with gov bonds.
- Budget deficit. Government spending is more than taxation revenue in the fiscal year from
April to April. This means that the government must borrow.
- Budget surplus. Taxation revenue is more than government spending in the fiscal year.
- National debt. Total stock of debt over time. Accumulation of budget deficit.
Output gap:
- The difference between the output an economy could produce and what its actually
producing.
Philips curve:
- Suggests that there is an inverse relationship between inflation and unemployment.
- The long run Philips curve is a straight line because in the long run there is no trade off
between inflation and unemployment.
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