Explain the main aims of government macro-economic policy.
Assess the view that the control of inflation should be the main priority of any government.
Explain why the AD curve slope downwards.
Describe the main determinants of consumer spending.
Identify the factors that might cause a shift in AD.
Identify the factors that influence long run AS.
Define the term 'aggregate supply'.
Use an AD/AS diagram to explain the likely effects of a general increase in raw material and wage costs in the economy.
Which component(s) of AD is/are likely to be affected in each case (C, I, G, X - M)?
(a) An increase in the money supply
(b) An increase in income tax
(c) An increase in house prices
(d) A decrease in the rate of interest
(e) A decrease in the population
(f) Greater pessimism about the future among consumers
(g) Improved business expectations
(h) A government decision to reduce capital spending on roads
(i) A fall in incomes abroad
(j) A fall in the UK exchange rate
(k) Greater spending on imports
Identify whether the short run aggregate supply curve (SRAS) will shift to the left, or to the right, given the following circumstances:
(a) A decrease in wage rates
(b) An increase in raw material prices
(c) A decrease in import costs
(d) An increase in indirect taxation/taxation of company profits
Identify whether the short run aggregate supply curve (LRAS) will shift to the left, or to the right, given the following circumstances:
(a) An increase in the skills of the workforce
(b) A decrease in the labour force
(c) A decrease in net investment
(d) Improvements in health care
(e) Advances in technology