Substantial
changes in commodity prices present important policy issues, both for
macroeconomic policies working on the demand side of the
economy, and for structural policies that work on the supply side.
Included
in the PowerPoint:
Macroeconomic Objectives (AS Level) a) Aggregate Demand (AD) and Aggregate Supply (AS) analysis - the shape and determinants of AD and AS curves; AD = C+I+G + (X-M)- the distinction between a movement along and a shift
in AD and AS - the interaction of AD and AS and the determination of the level of output, prices and employment b) Inflation - the definition of inflation; degrees of inflation and the measurement of inflation; deflation and disinflation - the distinction between money values and real data - the cause of inflation (cost - push and demand - pull inflation)- the consequences of inflation c) Balance of payments - the components of the balance of payments accounts (using the IMF / OECD definition): current account; capital and financial account; balancing item - meaning of balance of payments equilibrium and disequilibrium - causes of balance of payments disequilibrium
in each component of the accounts - consequences of balance of payments disequilibrium on domestic and external
economy d) Exchange rates - definitions and measurement of exchange rates - nominal, real, trade - weighted exchange rates - the determination of exchange rates - floating, fixed, managed float - the factors underlying
changes in exchange rates - the effects of
changing exchange rates on the domestic and external
economy using AD, Marshall - Lerner and J curve analysis - depreciation / appreciation - devaluation / revaluation e) The Terms of Trade - the measurement of the terms of trade - causes of the
changes in the terms of trade - the impact of
changes in the terms of trade f) Principles of Absolute and comparative advantage - the distinction between absolute and comparative advantage - free trade area, customs union, monetary union, full economic union - trade creation and trade diversion - the benefits of free trade, including the trading possibility curve g) Protectionism - the meaning of protectionism
in the context of international trade - different methods of protection and their impact, for example, tariffs, import duties and quotas, export subsidies, embargoes, voluntary export restraints (VERs) and excessive administrative burdens («red tape»)- the arguments
in favor of protectionism This PowerPoint is best used when using worksheets and activities to help reinforce the ideas talked about.