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Edexcel A-level Economics 2024 Macroeconomics Exam Quiz Study Guide
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Edexcel A-level Economics 2024Macroeconomics Exam Quiz Study
Guide
Macroeconomic objectives of government - Answer>>-
Economic growth
- Low inflation (2%)
- Full employment, low unemployment
- Balance of payments
- Fair distribution of income
Non-core government objectives - Answer>>- Environmental
sustainability
- Productivity growth
...
Circular flow of income diagram - Answer>>
Leakages in the circular flow - Answer>>Leaked from factor
incomes that firms give to households.
- S: savings
- T: taxes
- M: imports
Injections in the circular flow - Answer>>Injected into consumer
expenditure that households give to firms.
- G: gov spending
- I: investment
- X: exports
Methods of measuring GDP - Answer>>- Output method (g+s)
- Income (factor incomes)
- Expenditure (consumer expenditure)
,Therefore, GDP = output = income = expenditure.
Base year index number = - Answer>>100
Index number calculation - Answer>>(Raw number / base year
raw number) * 100
% change calculation - Answer>>(new - old/old)* 100
(change/original) * 100
Measures of economic growth - Answer>>- GDP (= income =
expenditure = output)
- GDP per capita
- GNI
- PPP
GDP - Answer>>Gross Domestic Product - the total market
value of all final goods and services produced annually in an
economy.
GDP per capita = - Answer>>GDP/population
GNI - Answer>>Gross national income = GDP + net factor
income from abroad.
The total value of goods and services produced within a country
together with the balance of income and payments from or to
other countries.
E.g: remittances are included...
Economic growth - Answer>>The increase in the potential level
of real output the economy can produce over a period of time.
, The expansion in the productive capability of an economy
(increased production in g+s).
Aggregate demand equation - Answer>>AD = C + I + G + (X-M)
= Consumption + Investments + Gov expenditure + (Exports -
Imports)
PPF (Production Possibilities Frontier) - Answer>>A graph that
shows the max combos of output that the economy can possibly
produce given the available factors of production (inputs) in a
given time period at the lowest cost.
Short-run economic growth - Answer>>Increase in actual GDP,
increase in AD.
Short-run economic growth PPF graph - Answer>>
Short-run economic growth S+D graph - Answer>>
Factors of SR economic growth - Answer>>As SR economic
growth is due to in increase in AD.
And AD = C + I + G + (X - M)
Increase in C / I / G / X = increase in AD = SR economic growth.
Explain how these factors affect economic growth:
- Lower interest rates
- Weaker exchange rates - Answer>>Lower interest rates:
= less saving (less reward for saving) = more disposable income
= more spending = C increase = AD increases (shifts right) = SR
eco growth.
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