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Questions and Answers
The Trump Administration announced tax cuts in 2018 for American households and firms.
The Trump Administration announced tax cuts in 2018 for American households and firms.
True (A)
The coronavirus pandemic has decreased investment worldwide.
The coronavirus pandemic has decreased investment worldwide.
False (B)
What is the name of the agreement that was signed in November 2020, that covers a market of nearly 2.2 billion people?
What is the name of the agreement that was signed in November 2020, that covers a market of nearly 2.2 billion people?
Regional Comprehensive Economic Partnership (RCEP)
The UK government implemented a furlough scheme, which subsidised 80% of monthly salaries.
The UK government implemented a furlough scheme, which subsidised 80% of monthly salaries.
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The OPEC imposed an oil embargo on the United States in 1973.
The OPEC imposed an oil embargo on the United States in 1973.
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The European Union has pledged to become climate-neutral by 2050.
The European Union has pledged to become climate-neutral by 2050.
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What are the new technical based qualifications called, which are available to 16 - 18-year-olds that last 2 years long?
What are the new technical based qualifications called, which are available to 16 - 18-year-olds that last 2 years long?
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What is the name given to unproductive businesses that have benefited from government intervention during the coronavirus pandemic?
What is the name given to unproductive businesses that have benefited from government intervention during the coronavirus pandemic?
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What was passed by Congress in 1978 to remove "red tape" in the aviation industry?
What was passed by Congress in 1978 to remove "red tape" in the aviation industry?
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China's "Made in China 2025" plan aims to make China a manufacturing superpower.
China's "Made in China 2025" plan aims to make China a manufacturing superpower.
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Structural unemployment is caused by technological advances and a lack of training for workers.
Structural unemployment is caused by technological advances and a lack of training for workers.
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The coronavirus pandemic caused cyclical unemployment in the hospitality sector.
The coronavirus pandemic caused cyclical unemployment in the hospitality sector.
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Seasonal unemployment can be seen during 'peak season' such as Christmas.
Seasonal unemployment can be seen during 'peak season' such as Christmas.
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Demand-pull inflation is caused by an increase in aggregate demand.
Demand-pull inflation is caused by an increase in aggregate demand.
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Cost-push inflation is caused by a decrease in the cost of production.
Cost-push inflation is caused by a decrease in the cost of production.
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The World Trade Organization (WTO) allowed the EU to impose tariffs on $4 billion of US goods, due to illegal subsidies provided by the US to Boeing.
The World Trade Organization (WTO) allowed the EU to impose tariffs on $4 billion of US goods, due to illegal subsidies provided by the US to Boeing.
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Germany has a considerable current account surplus due to its low prices and natural resources.
Germany has a considerable current account surplus due to its low prices and natural resources.
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The Covid-19 pandemic has disrupted global supply chains, causing a shift towards more "domesticated" supply chains.
The Covid-19 pandemic has disrupted global supply chains, causing a shift towards more "domesticated" supply chains.
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The Stern Report suggested that climate change is costing the world 20% of GDP every year.
The Stern Report suggested that climate change is costing the world 20% of GDP every year.
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High unemployment paired with high inflation is known as "stagflation".
High unemployment paired with high inflation is known as "stagflation".
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The Bank of England lowered interest rates to 0.25% following the UK's decision to leave the EU.
The Bank of England lowered interest rates to 0.25% following the UK's decision to leave the EU.
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The Fed (Federal Reserve) has adopted a new approach to setting inflation targets called "Flexible Average Inflation Targeting" (FAIT).
The Fed (Federal Reserve) has adopted a new approach to setting inflation targets called "Flexible Average Inflation Targeting" (FAIT).
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What is the term used when central banks directly buy bonds from their governments to finance their spending?
What is the term used when central banks directly buy bonds from their governments to finance their spending?
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Central banks are increasingly buying bonds from companies that fund environmentally friendly projects, as part of "Green Quantitative Easing".
Central banks are increasingly buying bonds from companies that fund environmentally friendly projects, as part of "Green Quantitative Easing".
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The "moral hazard" principle suggests that excessive government intervention can encourage risky behaviour by banks.
The "moral hazard" principle suggests that excessive government intervention can encourage risky behaviour by banks.
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The European Central Bank (ECB) announced a €750 billion Public Sector Purchase Programme (PSPP) in response to the Covid-19 pandemic.
The European Central Bank (ECB) announced a €750 billion Public Sector Purchase Programme (PSPP) in response to the Covid-19 pandemic.
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A decrease in corporation tax in the UK has been shown to stimulate investment in the long run.
A decrease in corporation tax in the UK has been shown to stimulate investment in the long run.
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Investment is a derived demand because it is driven by factors such as consumer demand.
Investment is a derived demand because it is driven by factors such as consumer demand.
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Fiscal policy refers to government actions that directly control interest rates.
Fiscal policy refers to government actions that directly control interest rates.
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The "ceteris paribus" assumption in economics states that all factors except the one being considered remain constant.
The "ceteris paribus" assumption in economics states that all factors except the one being considered remain constant.
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A reduction in corporation tax in the UK in 2013 attracted approximately 40 overseas firms to set up bases in the country.
A reduction in corporation tax in the UK in 2013 attracted approximately 40 overseas firms to set up bases in the country.
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Heathrow Airport's plans for a third runway were approved by the court of appeal.
Heathrow Airport's plans for a third runway were approved by the court of appeal.
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Boris Johnson pledged a "triple-tax lock" in his 2019 manifesto, promising that VAT, income tax, and National Insurance Contributions would not be increased.
Boris Johnson pledged a "triple-tax lock" in his 2019 manifesto, promising that VAT, income tax, and National Insurance Contributions would not be increased.
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During the 2008 Global Financial Crisis, Germany deployed large stimulus packages, demonstrating its support for Keynesianism.
During the 2008 Global Financial Crisis, Germany deployed large stimulus packages, demonstrating its support for Keynesianism.
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Financial repression involves government actions to boost inflation and lower interest rates, which can lead to savers losing out on returns.
Financial repression involves government actions to boost inflation and lower interest rates, which can lead to savers losing out on returns.
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Greece's fiscal austerity program during the 2010-2012 European debt crisis led to economic growth by 25%.
Greece's fiscal austerity program during the 2010-2012 European debt crisis led to economic growth by 25%.
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Pension reforms introduced by the French president, Emmanuel Macron, in 2019 were widely accepted by the public.
Pension reforms introduced by the French president, Emmanuel Macron, in 2019 were widely accepted by the public.
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British Airways was privatised in 1987 and subsequently saw a significant increase in efficiency.
British Airways was privatised in 1987 and subsequently saw a significant increase in efficiency.
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The UK government has set up Digital Markets Unit (DMU) to regulate firms that have a strategic market status, such as Google and Facebook.
The UK government has set up Digital Markets Unit (DMU) to regulate firms that have a strategic market status, such as Google and Facebook.
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The UK government has pledged to raise teachers' salaries to £30,000 by 2022, as part of its efforts to improve schools.
The UK government has pledged to raise teachers' salaries to £30,000 by 2022, as part of its efforts to improve schools.
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Boris Johnson announced new immigration plans in 2020 aimed at attracting highly skilled migrants to the UK, which could potentially lead to an increase in the natural rate of unemployment.
Boris Johnson announced new immigration plans in 2020 aimed at attracting highly skilled migrants to the UK, which could potentially lead to an increase in the natural rate of unemployment.
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China's "Made in China 2025" plan aims to increase investment in high-tech sectors, which could potentially shift the LRAS curve to the right, expanding output in the long run.
China's "Made in China 2025" plan aims to increase investment in high-tech sectors, which could potentially shift the LRAS curve to the right, expanding output in the long run.
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The UK government's investment in the Jaguar Land Rover (JLR) warehouse in the West Midlands helped to reduce unemployment levels.
The UK government's investment in the Jaguar Land Rover (JLR) warehouse in the West Midlands helped to reduce unemployment levels.
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Privatisation of industries always results in productivity improvements and efficiency gains for firms.
Privatisation of industries always results in productivity improvements and efficiency gains for firms.
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The Conservative party has plans to invest in large infrastructure projects like HS2, which aims to improve labor mobility across the UK.
The Conservative party has plans to invest in large infrastructure projects like HS2, which aims to improve labor mobility across the UK.
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Margaret Thatcher believed that trade unions hindered economic growth by leading to higher wages and better work conditions for workers.
Margaret Thatcher believed that trade unions hindered economic growth by leading to higher wages and better work conditions for workers.
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The "work-to-rule" approach can be detrimental to firms' productivity.
The "work-to-rule" approach can be detrimental to firms' productivity.
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FOREX markets are not volatile and are generally stable.
FOREX markets are not volatile and are generally stable.
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The appreciation of the Pound (£) against the Euro (€) in 2015 made exports more expensive.
The appreciation of the Pound (£) against the Euro (€) in 2015 made exports more expensive.
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The Covid-19 pandemic resulted in a strong US dollar ($) as investors viewed the US as a secure haven for investments.
The Covid-19 pandemic resulted in a strong US dollar ($) as investors viewed the US as a secure haven for investments.
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Fixed exchange rates can help promote stability in oil markets.
Fixed exchange rates can help promote stability in oil markets.
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The Chinese government devalued their currency, the Yuan, in order to boost their exports and gain a competitive edge in the trade war with the US.
The Chinese government devalued their currency, the Yuan, in order to boost their exports and gain a competitive edge in the trade war with the US.
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The Covid-19 pandemic caused a shift towards more "domesticated" supply chains globally.
The Covid-19 pandemic caused a shift towards more "domesticated" supply chains globally.
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Globalisation leads to the benefits of economies of scale for firms, resulting in lower prices for consumers.
Globalisation leads to the benefits of economies of scale for firms, resulting in lower prices for consumers.
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Foreign Direct Investment (FDI) can "crowd out" domestic investment, potentially reducing the attractiveness of domestic investments for governments.
Foreign Direct Investment (FDI) can "crowd out" domestic investment, potentially reducing the attractiveness of domestic investments for governments.
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The World Trade Organisation (WTO) ruled in favor of the EU and imposed tariffs on $4 billion worth of US imports in response to the illegal subsidies provided by the US to Boeing.
The World Trade Organisation (WTO) ruled in favor of the EU and imposed tariffs on $4 billion worth of US imports in response to the illegal subsidies provided by the US to Boeing.
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Outsourcing of production to low-income countries has resulted in structural unemployment in high-income countries.
Outsourcing of production to low-income countries has resulted in structural unemployment in high-income countries.
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The "single market" in the EU helps to prevent a "hard border" between Northern Ireland and the Republic of Ireland.
The "single market" in the EU helps to prevent a "hard border" between Northern Ireland and the Republic of Ireland.
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The term "ceteris paribus" implies that all other factors remain constant when examining a specific economic phenomenon.
The term "ceteris paribus" implies that all other factors remain constant when examining a specific economic phenomenon.
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China's economic development can be traced back to the "command economy" model implemented under the leadership of Mao Zedong.
China's economic development can be traced back to the "command economy" model implemented under the leadership of Mao Zedong.
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Deng Xiaoping opened up China to the world by creating four Special Economic Zones (SEZs), which attracted foreign investment (FDI) and led to significant economic growth.
Deng Xiaoping opened up China to the world by creating four Special Economic Zones (SEZs), which attracted foreign investment (FDI) and led to significant economic growth.
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China's transition from a "low-income country" status to a higher income country has caused foreign firms to relocate their supply chains away from China, a process referred to as "China plus one.
China's transition from a "low-income country" status to a higher income country has caused foreign firms to relocate their supply chains away from China, a process referred to as "China plus one.
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Study Notes
Economics A-Level Macroeconomics Contextual Analysis
- This document is not exam-board specific
- It provides a general overview of macroeconomic topics.
Contents
-
How the Macroeconomy Works:
- Determinants of Aggregate Demand (AD)
- Determinants of Short-run Aggregate Supply (SRAS)
- Determinants of Long-run Aggregate Supply (LRAS)
-
Economic Performance:
- Causes of Unemployment
- Causes of Inflation
- Balance of Payments on Current Account
- Conflicts between Macroeconomic Policy Objectives
-
Macroeconomic Policy:
- Monetary Policy
- Fiscal Policy
- Supply-Side Policy
-
The International Economy:
- Exchange Rates
- Globalisation and Trade
- Economic Development
Determinants of Aggregate Demand (AD)
-
Consumer Spending (C):
- Increased disposable income (due to tax cuts) leads to higher consumption, shifting AD right.
- Fears of redundancy lead to higher saving and decreased consumption, shifting AD left.
-
Investment (I):
- China's resilience during the pandemic led to increased investment.
- Brexit concerns reduced investment in the UK.
-
Government Spending (G):
- Increased spending on vocational training (T-levels).
- Spending cuts due to austerity measures reduced AD.
-
Net Exports (X-M):
- Increased trade agreements boost net exports.
- Strong exchange rates make exports more expensive, reducing net exports.
Determinants of Short-run Aggregate Supply (SRAS)
-
Cost of Employment:
- Increased wages during peak seasons (e.g., Christmas) lead to higher costs, shifting SRAS left.
- Government furlough schemes lower costs, shifting SRAS right.
-
Cost of Raw Materials:
- OPEC oil embargo increased raw material costs, shifting SRAS left.
- Transition to renewable energy sources lowers costs, shifting SRAS right.
-
Government Regulation:
- Environmental regulations increase production costs, shifting SRAS left.
Determinants of Long-run Aggregate Supply (LRAS)
-
Technological Advances:
- Increased technology and R&D investments promote higher productivity, shifting LRAS right.
-
Changes in Relative Productivity:
- Government intervention may impact the efficiency of firms, affecting LRAS.
-
Changes in Education and Skills:
- Improved education and skills lead to higher quality workers, shifting LRAS right.
-
Competition Policy:
- Increased competition promotes efficiency and productivity, shifting LRAS right.
The causes of unemployment
-
Structural Unemployment:
- Technological advances make some jobs obsolete
- National lockdowns during the pandemic impacted certain industries (e.g., hospitality)
-
Geographical Immobility:
- Workers' inability to move to areas with jobs hinders employment opportunities
-
Seasonal Unemployment:
- Temporary work during specific periods (e.g., Christmas)
-
Cyclical Unemployment:
- Economic downturns decrease demand, leading to job losses
The causes of inflation
-
Demand-pull Inflation:
- High demand during periods like Christmas increases prices.
-
Cost-push Inflation:
- Increased raw material costs (e.g., oil crisis) directly impact prices.
Balance of Payments on Current Account
-
Tariffs:
- The EU imposing tariffs on US goods led to a widening of the current account deficit for the USA.
-
Global Disruptions:
- COVID-19 lockdowns disrupted global supply chains.
-
Economic Growth disparities:
- Strong economies often see a surplus in their current account.
Macroeconomic Policy Objectives Conflicts
-
Economic Growth vs Environment:
- Environmental policies can conflict with economic growth objectives.
-
Unemployment vs Inflation:
- Policies aimed at lowering unemployment may have inflation as a trade-off.
Monetary Policy
-
Low Interest Rates:
- Stimulates demand and investment, but can lead to inflation.
- Used as a response to the pandemic and Brexit.
-
High Interest Rates:
- Used to control inflation.
-
Quantitative Easing:
- Increasing money supply; a response to various economic crises.
-
Monetary Financing:
- Central banks buying bonds directly from governments.
Fiscal Policy
-
Corporation Tax Reductions:
- Attracts foreign investment but may not always increase employment, or offset reduced tax revenues.
-
Government Spending:
- Increased expenditure on infrastructure or education.
-
Budget Deficits:
- Increased government borrowing during economic crises.
-
Austerity Measures:
- Government cuts to reduce national debt.
Supply-Side Policy
-
Education and Skills:
- Investment in education and training programs to better prepare workers.
-
Immigration Policies:
- Policies that attract skilled workers to support labor supply.
-
Infrastructure programs
- Improving infrastructure.
The International Economy
-
Exchange Rates:
- Currency values fluctuating due to political and economic factors.
- China managing its currency values.
-
Globalization and Trade:
- Global supply chains becoming vulnerable during crises.
- Increased trade regulations.
-
Economic Development:
- Countries pursuing sustainable economic growth despite global market pressures.
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Description
This quiz provides a comprehensive overview of Macroeconomics topics relevant to A-Level studies. Covering key elements such as aggregate demand and supply, economic performance indicators, macroeconomic policies, and the international economy, this material is essential for understanding macroeconomic principles. Engage with the content to test your knowledge and analytical skills in macroeconomic contexts.
