The Five debates against macroeconomics
.1-economic forecasting- Is it right for governments and policy agencies to try and predict
what will happen in the future and use this as an aid to decision making? Some would say
that its ok if they predict accura
. A currency union/ area is an area in which the currency is the same
. A currency union would lower the cost of international interaction.
. This would lead to large welfare gains.
. This is because currency unions eliminate transaction c
Ten principles of economics
. People face trade offs
.Trade-offs happen when facing scarcity
. For example when society faces a trade-off between equity and efficiency
. Efficiency- The property of society getting the most out of its resources
. Equity- T
. Unemployment is the number of people of working age who are able and available to work
and dont have a job
. Unemployment rate= No. of unemployed/ labour force *100
. To measure the number of claimants= No. of unemployed benefit claimants/
Production and growth
. Productivity- the amount of goods and services that a worker can produce in an hour of
. Productivity= GDP/ Hours worked)
. Average hours per employee= hours worked/ employment
. Employment rate= employment/ labour force
.Total Expenditure equals total income for the economy as a whole- The total money spent
on goods and services is equal to production value.
. GDP (gross domestic product) is the most common measure of economic well-being.
It measures total income of
Money growth and inflation
. If the central bank increases the amount of money in the economy we the have more
money to buy goods and services but we have not gotten any better at producing goods and
services as the physical capital, human capital and tec
The financial Crisis
. The rescission:
. When someone wants to buy a house usually they need a mortgage so they go to a bank
who agrees to lend them said money.
. When the recession hit there was a huge drop in housing prices leading to an increase in
Thinking like an Economist
. The main aim of economist is predict and describe peoples behaviour.
. To be able to do this we must build a model- a theoretical process which is supposed to
replicate a real process.
. Economic models are used to predict out
Supply and demand
.In the supply and demand model we explore how equilibrium price and quantity are
. A number of occurrences can change this such as the government taxing a certain
product, what happens if the minimum wage increases, how do min