Summary IB Economics Student Notes: HL Exam Mastery

3.4 to 3.7 t.GS =
AD shift leftward
$6S AD shift rightward
=




fiscal Policy ↳ TAX AD shift rightward
=




•
Government play with tax and Government spending # TAX AD shift leftward
=




Be as

Expansionary Policy Contraction ary Policy



}
LRAS LRAS
SRAS
Monetary
spas Policy
§
•

AD shift rightward
•

AD shift leftward a.m,
,, ,
,, , + ◦ +

↑
AD
→
,
•

Unemployment ↓ ,
←

Ap
•

Unemployment ↑ fiscal
AD •

Inflation AD,
•
Inf/ antion For Policy


Monetary Policy
•
Central Bank control money supply in
country
LRAS SRAS
Interest
rate "
"
-1 .
- - - - -
- - - - - - - - -
- - -




PL - - - - - -




Investment AD

Money supply Investment YE
quantity
Increase Money supply
1. Print Money Achieve LR Economic Growth
2.
Buy bonds 1.
Deregulation of Market
2. Privatization of Industries
3. Trade liberalization
Decrease Money Supply 4. Monopoly and competition regulation
1. Quantitative Easing [ 0% IR ] 5. Reducing the power of trade unions

2. Sell Bonds 6. Change in tax


Approach Unemployment
1. Direct tax and benefit
2. Trade unions

Market Base supply-side -




Policy 3. Minimum wages
4. Labor market regulation
◦
Government using Policy to shift
LRAS long-Run that allow market
"
"
Reduce Inflation
to function efficiently and achieve macro
1.
Monopoly and competition regulation
objective of sustain growth price stability
, ,
2. Reducing the power of trade unions

low unemployment 3. Change in tax
4. Privatization of Industries
5. Deregulation of Market