Changes in the UK’s Pattern of Trade Since 2000 UK firms are internationally competitive in telecommunications, aerospace engines and computer software They are also strong in services, especially financial services This includes banking, forex trading, share dealing,...
Advantages That May Be Gained From International Trade One main advantage from international trade is that it allows an economy to specialise in particular products, as the ones it doesn’t produce it can import Consumers benefit from higher competition in the form of...
Methods of Protection Protectionism is the protect of domestic industries from foreign competition Tariffs Tariffs are taxes on imported products The main aim of a tariff is to shift demand from imports to domestically produced products They can raise revenue for the...
The Effectiveness of Supply-Side Policies Supply Side Policies may be effective in increasing AS, but if there is a lack of AD, the extra capacity created will not be used, and output will be unchanged. SSPs also have a long time to have an effect on the economy Some...
Monetary Policy Monetary policy is the central bank and/or government decisions on the rate of interest, the money supply and the exchange rate Both monetary and fiscal policies are known as demand-side policies, as they both seek to influence AD The main monetary...
Supply-Side Policies Supply side policies are policies designed to increase aggregate supply by improving the efficiency of labour and product markets They are never designed to reduce AS, whereas fiscal and monetary can be designed to reduce AD If supply side policy...
Introduction A government can use a range of policy measures to achieve its macroeconomic objectives The measures it uses is determined by what the government is trying to achieve, and how effective the measures are at achieving the specific target. The level of...
Fiscal Policy Fiscal policy is the taxation and spending decisions of a government The government can control tax rates, the types of taxes, what it taxes, and the amount, timing and composition of government spending. The main aim of fiscal policy is to influence AD,...
The Effectiveness of Monetary Policy Disadvantages Monetary policies relies on accurate information, so it follows that if the information is not accurate, it is likely that the monetary policy will be ineffective Monetary policy instruments can be hard to control g....
Effectiveness of Fiscal policy Advantages Taxes and government spending adjust automatically to offset fluctuations in real GDP Has the potential to increase both AD and AS via spending and taxation Disadvantages It can take time for the policy implemented to have an...
Policies to Improve the Balance of Payments In the short term, measures to improve the balance of payments position tend to focus on the demand-side of the economy In the long term, it’s the supply-side of the economy. Short Run There are three main ways the...
Policies to Promote Economic Growth Short Run If the economy is producing below full capacity, then expansionary fiscal or monetary policy can increase AD, and thus increasing output The advantages of fiscal and monetary policy is that they can often both stimulate...
Policies to Control Inflation Coast-Push Inflation If a government believes that inflation is caused by excessive wage rises, then it may seek to implement measures which halt wage rises In the public sector, it can simply do this by decreasing the amount of...
Possible Conflicts Between Policy Objectives Objectives of low growth and low unemployment can be achieved by expansionary demand-side policy However, this is likely to make it difficult for the government to achieve low inflation and a good balance of payments...
Policies to Reduce Unemployment When deciding on policies to reduce unemployment, the choice will depend on: The cause of unemployment The rate and duration of unemployment The state of other macroeconomic objectives Demand-Side Policies If the economy is operating...