MACRO ECONOMICS
REVISION GUIDE
The 4 Government
objectives:
1. Economic Growth
2. Price Stability
3. Low unemployment
4. Balance of Payments
, Costs of economic growth:
Economic Growth: The growth in the Environmental costs: Production and consumption of goods can lead to damage to the
output of the economy over time environment e.g oil spills (this could have negative impacts on other industries e.g fishing)
GDP: Gross Domestic Product; The total Air pollution: India and China suffer from high levels of pollution due to reliance on fossil
value of goods and services produced in fuels, causing respiratory and skin diseases
the country in a year Global warming: Global warming increases as a result of increased emissions
GDP per capita: GDP divided by the Congestion: If output increases, more goods have to be transported, causing traffic
population, representing the average congestion
income of a person in a country and used Depletion of resources: More raw materials are needed to make more output, so non-
to measure living standards renewable resources are used up and the ability to produce in the future is reduced
Calculating rate of economic growth: Lower quality of life: With growth can come other issues which can make life stressful.
(change in GDP/original GDP) x 100 There is more pressure in jobs and less time for relaxation.
When there is an increase in economic Inequalities of income and wealth: The increase in incomes may not be evenly spread
growth, output, incomes and through the population
expenditure all rise Inflation: If demand rises faster than supply, there is more competition between consumers
Value of output = Value of income = for goods, and prices rise
Value of expenditure
3.1 Economic Growth
Causes of economic growth (TIGERS):
Technological advancements: Increases productivity, leading to Benefits of economic growth:
greater output, therefore greater GDP Rise in living standards: When people have more goods to
Investing: Buying capital makes production faster and more efficient, consume their average incomes increase
leading to an increase in output Reduction in poverty: As the economy grows tax revenue
Government policies: A government may have policies that affect for the government goes up. Some of this revenue is
specific markets or the whole economy. E.g supply side policies spent on universal credit, lifting low income people out of
increase output and therefore GDP and economic growth increase too. poverty
Education and Training: Having skilled workers increases quality and Rise in welfare of population: The government uses
quantity of output, so there is an increase in GDP increased tax revenue to better fund public services e.g
Resources: Increased resources (factors of production) leads to a NHS, schools, meaning a healthier, more productive
higher output workforce
Size of workforce: Workers entering the population (e.g by migration, Fall in unemployment: As the economy grows more
increased birth rate) can increase output, as there is an increase in the workers are needed to sustain and further increase
factors of production, causing more productivity and output growth, so more people are employed
REVISION GUIDE
The 4 Government
objectives:
1. Economic Growth
2. Price Stability
3. Low unemployment
4. Balance of Payments
, Costs of economic growth:
Economic Growth: The growth in the Environmental costs: Production and consumption of goods can lead to damage to the
output of the economy over time environment e.g oil spills (this could have negative impacts on other industries e.g fishing)
GDP: Gross Domestic Product; The total Air pollution: India and China suffer from high levels of pollution due to reliance on fossil
value of goods and services produced in fuels, causing respiratory and skin diseases
the country in a year Global warming: Global warming increases as a result of increased emissions
GDP per capita: GDP divided by the Congestion: If output increases, more goods have to be transported, causing traffic
population, representing the average congestion
income of a person in a country and used Depletion of resources: More raw materials are needed to make more output, so non-
to measure living standards renewable resources are used up and the ability to produce in the future is reduced
Calculating rate of economic growth: Lower quality of life: With growth can come other issues which can make life stressful.
(change in GDP/original GDP) x 100 There is more pressure in jobs and less time for relaxation.
When there is an increase in economic Inequalities of income and wealth: The increase in incomes may not be evenly spread
growth, output, incomes and through the population
expenditure all rise Inflation: If demand rises faster than supply, there is more competition between consumers
Value of output = Value of income = for goods, and prices rise
Value of expenditure
3.1 Economic Growth
Causes of economic growth (TIGERS):
Technological advancements: Increases productivity, leading to Benefits of economic growth:
greater output, therefore greater GDP Rise in living standards: When people have more goods to
Investing: Buying capital makes production faster and more efficient, consume their average incomes increase
leading to an increase in output Reduction in poverty: As the economy grows tax revenue
Government policies: A government may have policies that affect for the government goes up. Some of this revenue is
specific markets or the whole economy. E.g supply side policies spent on universal credit, lifting low income people out of
increase output and therefore GDP and economic growth increase too. poverty
Education and Training: Having skilled workers increases quality and Rise in welfare of population: The government uses
quantity of output, so there is an increase in GDP increased tax revenue to better fund public services e.g
Resources: Increased resources (factors of production) leads to a NHS, schools, meaning a healthier, more productive
higher output workforce
Size of workforce: Workers entering the population (e.g by migration, Fall in unemployment: As the economy grows more
increased birth rate) can increase output, as there is an increase in the workers are needed to sustain and further increase
factors of production, causing more productivity and output growth, so more people are employed
