Inflation is when there is a rise in average price level. It is measured by the CPI which tracks the monthly prices of a weighted average basket of goods and services. If inflation was very high, and above the 2% target rate, this would be damaging to the UK economy. If prices are constantly rising, it is very likely that wages are not rising as often. If this is the case, disposable incomes would be falling as consumers would have less money left over after their normal spending. This would lead to a decline in living standards. Workers may ask firms for higher wages. Firms could then choose to increase wages and push prices up even more, or firms could lay-off workers. If firms decide to lay-off workers, then this would cause an increase in the unemployment rate.
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Education and Training | A-Level Economics Model Paragraph (AQA, Edexcel, OCR)
Another policy to reduce the gender pay gap could be to improve the education and training of women. In a free labour market, wages are determined by supply and demand of labour alone.
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Wage Differentials | A-Level Economics Model Paragraph (AQA, Edexcel, OCR)
* Demand for labour: number of workers that firms are willing and able to hire at each given wage
* productivity of workers
* derived demand (demand for final good or service)
* substitutability of capital
* retail
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A-Level Economics | Macroeconomic Policies
See answers below
* Expansionary fiscal policy
* Description:
* Diagram:
* Good macroeconomic effects:
* Bad macroeconomic effects:
* Evaluation points:
* Contractionary fiscal policy
* Description:
* Diagram:
* Good macroeconomic effects:
* Bad macroeconomic effects:
* Evaluation points:
* Expansionary monetary policy
* Description: