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Macro essays

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  • 9 times out of 10 refer to the 4 macroeconomic objectives in intro and conclusion
  • 3 policies: fiscal, monetary, supply-side
  • supply-side policies improve economic incentives and productive potential; reducing benefits, reducing income tax, reducing corporation tax
  • supply-side policies can be INTERVENTIONIST or MARKET-BASED
  • aim to target geographical or structural immobility of labour etc.
  • TIME LAG and COSTLY.
  • HS2 was expected to cost between 72 billion and 98 billion pounds
  • due for completion between 2029 and 2033
  • economic growth: increase in the rate of growth of GDP
  • sr economic growth: caused by an increase in AD.
  • lr economic growth: accompanied by an increase in LRAS/ productive potential

Year 13 macro

  • is GLOBALISATION/ FREE TRADE/ MEMBERSHIP OF CUSTOMS UNION good or bad
  • globalisation is the process of economies acting together as one single, international economy
  • free trade is the act of trading without protectionist barriers
  • customs union: if you are part of it, no protectionism n each other. you will have protectionism on non-members.
  • good for developed
  • bad for developed
  • good for developing
  • bad for developing
  • good for everyone: COMPARATIVE ADVANTAGE
  • comparative advantage:
  • specialisation arguments. make up numbers. mention the idea of country A being way worse at good Y but if it produces good X the entire world production improves. plus LEARNING BY DOING.
  • absolute advantage: not a good theory.
  • year 13 policies: to lower current account deficit, to encourage trade, increase development
  • protectionism (tariffs), lower exchange rate (fixed vs floating), SUPPLY SIDE POLICIES.
  • floating exchange rate: reduce interest rates lower er and vice versa.
  • Economic development can be measured by HDI etc. it's an improvement in undefined factors but people often consider living standards, health and education.
  • ECONOMIC GROWTH IS NECESSARY FOR ECONOMIC DEVELOPMENT BUT NOT SUFFICIENT
  • if they ask you for ways to improve development: talk about ways to improve growth and evaluating it does not guarantee it. CORRUPT GOVERNMENTS!!! POVERTY TRAP!!!!!
  • MARKET BASED: PROMOTE FDI (so many ways), deregulation, remove protectionism/ free trade (less retaliation)
  • WAYS TO PROMOTE FDI: low wages, low corporation tax, skilled workforce.
  • INTERVENTIONIST: protectionism, fixed exchange rate, nationalisation
  • EXPORT LED GROWTH --> good for everyone especially developing countries
  • supply side policies, DEVALUE THE CURRENCY.
  • EVALUATION FOR EXCHANGE RATES/ IMPORTS AND EXPORTS = MARSHALL LERNER CONDITION