Fiche etude de cas 2018

Macroeconomics

Governments look to manipulate their economies too achieve particular aims.

There are 5 primary aims:

Unemployment

Economic Growth

Inflation

Trade Position

GDP is of particular importance. GDP led measures the value of output produced with in an economy, usually an annually.

The Business Cycle

Graph of the business cycle above

= A boom

Incomes

Economic Growth

Employment

Trade

= A slump/ recession

Incomes

Economic Growth

Unemployment

Trade

Governments prefer a smooth, business cycle close to the countries long term trend, rather than a volatile business cycle. Hence, they adopt different policies to influence the macroeconomy and achieve this.9

Economic Growth- % change in GDP

6/09/2017

Typically as a country grows and develops the nature of its production tends to change.

Primary Sector- the extraction or growing of natural resources/ raw materials. (Often low value- added production)

Secondary Sector- manufacturing

Tertiary Sector- services

The Australian Macro-Economy Questions:

It says that it grew at its fastes in three years (only in the second quarter of the year). This mostly likely means the economy was recovering during the previous quarters and finally boomed at the end of the year.

Australia’s iron and ore’s industry grew because China invested and bought in that industry.

If the GDP has increased than this means unemployment has lowered.

This just means the Australian economy was at a constant growth and the GDP was rising.

This means the Australian GDP is going into a slump/recession.

Corrections: The Australian Macro-Economy Questions:

If the economy grew at its fastest pace, the fact that it grew means that economic growth is increasing.Economic growth is positive,(wouldn’t be slumping)

The demand for iron and ore has increased. Profits have increased and

They are implying more labour thanks to the iron ores’ market growth.

At no point did the economy have negative economic growth (-GDP)

It started to slump.

Iron and Ore = the Primary sector, because it is a a naturally extracted resource.

Stimulus package aimed to increase economic growth (because of a slump/recession)

Employees benefit from higher salaries, Unemployment has decreased.

General prices go higher, price equivalent of a slump.

GDP and Production Possibility Curves

Capital Good

A+ A: GDP 2015 => HK$ 2.4 trn

The PPC shows the maximum possible output, using all resources at maximum efficiency.

PPC 1

B

$1.2trn

A

PPC

$1.2

Consumer Good

Capital Good

GDP = OX + OY

With Economic Growth ——> A Shifts to B and PPC shifts to PPC1

PPC 1

B

R

A

PPC

X

YZ

Consumer Good

0

Economic Growth will result from the following:

Investment: ———> Buying or building a capital

Discovery or new resources

New technology

Gross National Income/Product

13/09/2017

GNI measures the total income earned in an economy over a given period of time.

where GNI = GDP + Net property income from abroad. — — — > Profits, Dividends, Interest

sovereign debt = government’s debt

14/09/2017

The Circular Flow model:

One basic representation of a macroeconomy is the circular flow model

Aggregate Demand and Aggregate Supply

AD represents the total demand for all domestic goods and services.

— — — > Spending by households, forms and the government, in the economy.

AS

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