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Unit 2 EC4 I and EC4 J Scheme of Work New Specification August to October break. Following on from our introduction to AD in June, we continue with this topic. Components of AD. Consumption which included MPC and MPS and other factors affecting C including: Disposable income IR, social safety net, confidence, culture, wealth effect. AD Curve (shifts and movement along) Investment Factors affecting investment Interest Rates Confidence (there are quantifiable measures of business confidence which we could use) Risk Influence of Govt and regulations Level of retained profits Accelerator Government Expenditure Exports minus Imports All the major factors of current account are mentioned here, but perhaps the teaching of this is left to the section entitled “Balance of Payments” Definition of Marginal Propensity to import. Quiz on AD. August to October break. Aggregate Supply Distinction between movement along and a shift in AS curve. Different types of AS curves (Classical and Keynesian). Distinction between short and long term AS curves. Short run: costs of raw materials, exchange rates and taxes. Long run: technological changes, relative productivity, education and skills, regulation and tax changes, demographic changes, competition policy. August to October break. Interaction of AD and AS Impact on real output and price level as a result of changes in one or both curves. Multiplier. Calculations with the multiplier. Significance of multiplier (which I suppose means leakages). Circular Flow of Y Distinction between Y and wealth bring that up in Consumption anyway. Injections and withdrawals (which we will have mentioned in multiplier anyway) Test on AD and LRAS Measures of Economic Performance From October break to end of November. Economic Growth Real GDP as a measure Distinction between real and nominal and total and per capita GDP. Awareness of other national y measures. GNP, GNI, GDP at PPP. GDP comparisons over time and between countries. The limitations of using GDP to compare living standards between countries and over time. More about growth Causes of growth: increase in AD or potential growth due to AS shift. Constraints on growth: poor FOP, inadequate capital markets, unstable Govt, poor infrastructure, absence of property rights and poor ovt regulation. Benefits of growth: these can be illustrated with examples for citizens, firms and Govt. Costs of growth: environment, Bal of Pay, inflation (some could be worse off in real terms), opportunity cost of growth. Output gaps. Difference between actual and potential growth. POGs and NOGs. Definition and characteristics of recession. Christmas test will examine everything up to here. December 2015 Employment and Unemployment Measures of U using ILO Causes of U: skills mismatch, occupational immobility, geo immobility, demand deficiency, real wage inflexibility. The consequences of U; poverty, G budgets, social effects more could be added here. Distinction between U and underemployment Significance of changes of rates of employment and unemployment. Impact of migration on employment and unemployment. January 2016 Inflation Inflation, disinflation, deflation. Calculating inflation CPI referring to weighting. Producer Price Index as possible future indicator Causes including demand pull and cost push, excessive growth of money supply. Effects of inflation including Y distribution, competitiveness and I. From end of January we increase the lessons to six a week. Late January to Feb break: Balance of Payments Components of B of P Surpluses and deficits. Causes of an imbalance, at a basic level. (This seems a lot shorter than the previous specification – look at past papers, email examiner to find out the depth we need to go here) Impact of deficit? Corrective measures?) Late January to Feb break: Measures of development HDI Definitions of PPPs Advantages of HDI is making comparisons between countries. Other measurements: Adults males in agriculture, access to clean water, energy consumption per capita, access to mobile phones per 1,000. March Macroeconomic Objectives Growth, price control, full employment, equilibrium in Bal of Pay., balanced fiscal budgets, fair redistribution of Y, protection of the God damn environment. March Conflicts between objectives: Phillips Curve, economic growth and environmental sustainability, inflation and current account, balanced budgets and short run growth. March to mid April Macroeconomic Policy Instruments. Monetary and Fiscal and use of diagrams. Decision making process of the Bank of England will be covered. Definition of Supply Side policies and use of supply side policies such as free market and interventionist SS measures. Free market: deregulation, privatisation, reduction in taxation, comp policy, changing level of benefits, cutting bureaucracy. Interventionist: subsidies to education, training and investment, regional policy, finance for investment start ups, infrastructure. Strengths and Weaknesses of Demand and Supply Side Policies Mid April to May: Revision May TEST