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AS and A Level: Macroeconomics
Notes should just be bullet pointed sentences which reflect the main theme and are useful in to triggering your memory.
Id and ego seek
220 AS and A Level Macroeconomics essays
- Marked by Teachers essays 4
- Peer Reviewed essays 36
The aim of this essay is to discuss the relevance of John Keynes to the current macroeconomic situation in the UK.5 star(s)
Excellent piece of work. Well researched and argued. You could argue that Keynes is less relevant in the present economic crisis because this is not a normal economic crisis. Normally…
- Essay length: 1788 words
- Submitted: 02/06/2010
- Marked by teacher: David Salter 12/02/2012
This is a well planned and structured piece that makes many good points. It would benefit from the classic AD/AS diagram to show economic growth and its effect on inflation.…
- Essay length: 1114 words
- Submitted: 02/12/2011
- Marked by teacher: David Salter 12/02/2012
- Reviewed by: groat 10/03/2012
This essay responds superbly to the question, with lots of knowledge outside the syllabus being used. There is a sustained focus on the impacts of unemployment. I particularly liked the…
- Essay length: 1548 words
- Submitted: 02/07/2011
- Reviewed by: groat 11/03/2012
This essay engages superbly with the question. There is a clear understanding of fiscal policies, and how they can reduce unemployment. The essay then goes to further to evaluate the…
- Essay length: 558 words
- Submitted: 18/07/2010
- Reviewed by: groat 12/03/2012
This essay strongly captures how the government might stimulate the economy in an economic recession, and evaluates the use of these government policies to a certain extent. The writer begins…
- Essay length: 1520 words
- Submitted: 05/07/2007
- Reviewed by: Arcturus 19/03/2012
This essay engages superbly with the question. There is a clear progression from knowledge of what inflation is, how it affects the economy, and then a discussion of the extent…
- Essay length: 1565 words
- Submitted: 09/02/2004
- Reviewed by: groat 20/03/2012
This essay engages with the question superbly. There is a clear understanding of the composition of aggregate demand, shown by an inclusion of the formula and the components. I would've…
- Essay length: 1165 words
- Submitted: 20/02/2012
- Reviewed by: groat 28/02/2012
The macroeconomic objectives
- 1 Growth is measured usually by the GDP per capita. Be aware that just looking at GDP as a measure of growth is flawed to some extent and know the criticisms of it e.g. ignores the distribution of income, exchange rate problems.
- 2 Full employment – This usually tracks GDP growth to a large extent. Some unemployment in an economy is normal as people change jobs (frictional unemployment) and some would say a little unemployment is useful for preventing big wage rises.
- 3 Low inflation – Inflation is a persistent rise in the level of prices. If a country has inflation its prices are likely to rise compared with foreign competitors so the country will become uncompetitive.
- 4 The balance of payments needs to be in equilibrium, where the value of imports equals the value of exports.
- 5 The most important objective varies – For many years it was the balance of payments and unemployment. Until very recently it was inflation and much more recently, growth has become the most important. Remember that all objectives need to be achieved at the same time.
- 1 The government tries to regulate the economy, mainly by affecting the level of Aggregate Demand (AD) and Aggregate Supply (AS). There are three main types of policy listed below.
- 2 Fiscal policy is using taxation and government spending to regulate AD by, for instance, increasing tax to reduce AD or borrowing more to spend on infrastructure projects to increase AD. Fiscal policy is used less to affect AD recently.
- 3 Monetary policy is essentially affecting the amount of money in the economy by changing the money supply, changing the exchange rate or altering the interest rate. In recent years, monetary policy has mainly come to mean just changing the interest rate with the main aim of affecting AD however quantitative easing is also monetary policy.
- 4 Supply side policies are designed to increase AS by improving the production potential of the economy. Examples include improving education and training, increasing competition for businesses and tax breaks for research and development.
- 5 In practice, governments use all three policies to regulate the economy. Supply side policies are seen as most effective as they also lead to lower inflation but their effects are in the long term.
Keynes versus Friedman
- 1 This is regarded as being a key ideological stand off regarding government regulation of the economy.
- 2 Keynes believed that the government had a big role to play in the economy by regulating aggregate demand. When AD was too low so there was low growth and unemployment, the government should borrow money and embark on public sector expenditure to stimulate AD and the economy. When AD was too high, the government should increase tax or reduce government spending to reduce AD.
- 3 Friedman was a monetarist. He believed that the free market should be left to itself to regulate the economy. He believed that left alone, the economy would provide full employment and growth. The government would only create inflation by injecting money into the economy. The government should regulate the money supply only.
- 4 The dominant ideology changes. From 1945 to 1979, Keynes was dominant. During the 1980s monetarism came back. Now there is arguably a more balanced view.
- 5 Avoid simplistic analysis. The debate concerning the role of the government in macroeconomics is complex.
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