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EnglandEconomics

Macroeconomics: Aggregate demand, supply and policy

6 dot points across 6 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

What determines aggregate demand and supply, and how do they set the price level and national output?

Aggregate demand and aggregate supply: the components of aggregate demand, the determinants of short-run and long-run aggregate supply, macroeconomic equilibrium, and the effects of shifts in AD and AS.
An Eduqas A520 answer to the AD-AS model, covering the four components of aggregate demand and what shifts them, the determinants of short-run and long-run aggregate supply, macroeconomic equilibrium, and how shifts in aggregate demand and supply affect the price level and real national output.
13 min answer →

How does fiscal policy manage demand and the public finances, and what are its limits?

Fiscal policy: government spending and taxation, the budget balance and the national debt, direct and indirect and progressive and regressive taxes, automatic stabilisers, and the strengths and weaknesses of fiscal policy.
An Eduqas A520 answer to fiscal policy, covering government spending and taxation, the budget balance and the national debt, direct versus indirect and progressive versus regressive taxes, automatic stabilisers, and the strengths and weaknesses of fiscal policy in managing aggregate demand.
12 min answer →

How do interest rates and the money supply influence the economy, and what are the limits of monetary policy?

Monetary policy: interest rates and the transmission mechanism, the role of the central bank and inflation targeting, quantitative easing, and the strengths and weaknesses of monetary policy.
An Eduqas A520 answer to monetary policy, covering how the central bank uses interest rates and the money supply, the monetary transmission mechanism, inflation targeting and the role of an independent central bank, quantitative easing, and the strengths and weaknesses of monetary policy.
12 min answer →

Why do macroeconomic objectives conflict, and what does the Phillips curve say about inflation and unemployment?

Policy conflicts and the Phillips curve: the trade-offs between macroeconomic objectives, the short-run Phillips curve relationship between inflation and unemployment, the long-run Phillips curve, and the role of expectations.
An Eduqas A520 answer to macroeconomic policy conflicts, covering the trade-offs between growth, inflation, unemployment and the current account, the short-run Phillips curve trade-off between inflation and unemployment, the vertical long-run Phillips curve, and the role of inflation expectations.
12 min answer →

How do supply-side policies raise productive capacity, and how do market-based and interventionist approaches differ?

Supply-side policies: market-based and interventionist supply-side policies, their effect on long-run aggregate supply and the objectives, and their costs, limits and time lags.
An Eduqas A520 answer to supply-side policies, covering the distinction between market-based and interventionist supply-side policies, how they shift long-run aggregate supply to raise potential output, their effect on the macroeconomic objectives, and their costs, limits and long time lags.
12 min answer →

How does the multiplier amplify a change in spending, and how does the accelerator link investment to growth?

The multiplier and accelerator: the circular flow of income, injections and withdrawals, the multiplier process and its calculation from the marginal propensities, and the accelerator effect.
An Eduqas A520 answer to the multiplier and accelerator, covering the circular flow of income, injections and withdrawals, the multiplier process and how to calculate it from the marginal propensities to consume, save, tax and import, and the accelerator effect linking investment to the rate of change of output.
12 min answer →