Complete revision notes for Unit 2. Aggregate demand and supply, inflation, unemployment, economic growth and the policy toolkit — everything you need for WEC12.
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How we measure the health of the whole economy — GDP, inflation, unemployment and the balance of payments. The key indicators that drive policy decisions.
Total spending in the economy — consumption, investment, government spending and net exports. Understanding what shifts the AD curve is essential for macro analysis.
The productive capacity of the economy in the short run and long run — what determines how much the economy can produce and how supply-side changes affect output and prices.
The circular flow of income model — how money flows between households and firms, the role of injections and leakages, and how equilibrium national income is determined.
What drives long-run increases in output — actual vs potential growth, business cycles, living standards, and the debate about sustainable development.
The policy toolkit — fiscal, monetary and supply-side policies, their strengths and limitations, and the inevitable trade-offs between competing objectives.
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