Microeconomic policies
- government intervention
- indirect tax
- subsidy
- tradeable pollution permits
- provision of information
- minimum price
- maximum price
- labour markets
- minimum wage
- education and training
- market structures
- maximum price on monopoly
- subsidise new entrants
- nationalisation
- privatisation
- macro
- fiscal
- monetary
- supply side
- market based
- reduce income tax
- reduce corporation tax
- reduce unemployment benefits
- privatisation and deregulation
- interventionist
- spending on education and training
- spending on infrastructure
- nationalisation
- improving current account deficit
- devalue the currency (reducing interest rates?)
- supply-side policies
- contractionary demand side policies
- tariffs
- promotion of fdi
- market based - HARROD DOMAR MODEL
- reduce income tax
- reduce corporation tax
- interventionist - NATIONAL DEBT
- spending on education and training
- spending on infrastructure
Evaluate the measures that might be taken to reduce a deficit on the current account of the UK’s balance of payments. (June 2017)
- TARIFF
- DIAGRAM
- IMPORTS FALL
- AD INCREASE
- RETALIATION
- TARIFF REVENUE
CROWDING OUT
- INCREASE IN GOVERNMENT SPENDING
- FUNDED BY INCREASE IN GOVERNMENT BORROWING
- SOLD GOVERNMENT BONDS
- BANKS BUY THE GOVERNMENT BONDS
- THAT REDUCES BANKS LIQUIDITY
- REDUCES PRIVATE SECTOR INVESTMENT
QUANTITATIVE EASING
- CENTRAL BANK CREATES MONEY ELECTRONICALLY
- BUYS BACK GOVERNMENT BONDS FROM BANKS
- BANKS HAVE GREATER LIQUIDITY
- THERE IS AN INCREASE IN MONEY SUPPLY IN THE PRIVATE SECTOR
- PUSH DOWN INTEREST RATES
- BANKS MORE WILLING AND ABLE TO LEND AT A LOWER RATE
- PEOPLE MORE WILLING AND ABLE TO BORROW/ LESS WILLING AND ABLE TO SAVE
- INCREASE CONSUMER SPENDING AND INCREASE INVESTMENT
EFFECTS OF FINANCIAL MARKET FAILURE
- DEMAND SIDE SHOCK
- NEGATIVE MULTIPLIER EFFECT
Evaluate whether using interest rate policy to achieve an inflation target is an effective way to keep inflation low and stable.
- INTRO - 4 OBJECTIVES
- P1 - MONETARY POLICY
- HIGH INTEREST RATES
- INCREASE COST OF BORROWING
- INCREASE REWARD FOR SAVING
- LOWER CONSUMER SPENDING AND BUSINESS SPENDING
- AD WILL SHIFT TO THE LEFT
- FALL IN PRICE LEVEL
- IT CAN ALSO CAUSE AN INCREASE IN UNEMPLOYMENT
- THIS DEPENDS ON THE STATE OF THE ECONOMY
- HIGHER INTEREST RATES ALSO AFFECTS THE EXCHANGE RATE
- INCREASE IN HOT MONEY FLOWS INTO THE UK
- SAVING IS MORE ATTRACTIVE SO PPL BUY THE POUND
- THIS INCREASES DEMAND FOR THE POUND
- VALUE OF THE POUND GOES UP
- IMPORTS TO INCREASE
- AD WILL FALL MORE?
- P2 - ALTERNATIVES
- REDUCE INCOME TAX (SUPPLY SIDE POLICIES)
- MORE INCENTIVE FOR SKILLED WORKERS TO WORK IN THE UK
- LAFFER CURVE
- INCREASE IN PRODUCTIVITY AROUND THE UK
- OUTPUT INCREASES
- LRAS SHIFTING RIGHT
- PRICE LEVEL FALLS
- TIME LAG!
- AD WILL INCREASE
- MORE INFLATION!
- GREAT FOR PREVENTING INFLATION IN THE FUTURE
- BUT NOT GOOD FOR REDUCING INFLATION RIGHT NOW
Evaluate whether aid or trade offers the better path to poverty reduction in developing economies.
- INTRO - IMPROVEMENT IN HDI
- P1 - TRADE
- SIGNING TRADE DEALS
- REMOVAL OF TARIFFS
- HOPING THAT OTHER COUNTRIES REMOVE TARIFFS BACK
- TARIFF DIAGRAM
- EXPORTS INCREASE
- AD INCREASE
- EVAL - LOSS OF TARIFF REVENUE
- P2 - AID
- increase spending on infrastructure
- increase in lras
- long run economic growth
- increase in real gdp
- more demand for jobs
- more people escape poverty
- goods and services produced at a higher quality and lower cost of production
- more exports
- more economic growth and more income
- EVAL - opportunity cost - low interest rates!
- MICROECONOMIC EFFECTS
- AC CURVE SHIFTS DOWN
- SPN PROFIT INCREASES
- FIRMS CAN INCREASE RE-INVESTMENT
- DYNAMIC EFFICIENCY
- ECONOMIES OF SCALE
- CONSUMERS BENEFIT FROM GREATER QUALITY
- MONOPOLY POWER
- AVERAGE COSTS MAY REMAIN HIGH DUE TO WASTE
- FIRMS MAY USE PROFIT TO PAY SHAREHOLDERS RATHER THAN RE-INVEST
- EXTERNALITIES
- MACROECONOMIC EFFECTS
- MICROECONOMIC POLICIES
- MACROECONOMIC POLICIES