Summary Macroeconomics

A snapshot of the summary - Macroeconomics Author: Manfred Gärtner ISBN: 9780273769958

• 1 Macroeconomic Essentials

• 1.2 Essentials of macroeconomic accounting

• What are the three main reasons not all salary paid flows back to the firms?

  - People save
  - Government levy taxex
  - People buy from foreign firms
• What are the three main injections into the circular flow upping the domestic aggregate output?

  - Firms invest
  - Government spending
  - Foreigners buy goods
• What equation involving all three leakages and injections, paired up, holds at all times?

  (S-I) + (T-G) + (IM-EX) = 0
• What are the public net savings? (circular flow)

  The balance of T-G
• What are the net exports? (circular flow)

  The balance of IM-EX
• When do we speak of a country in 'twin deficit'?

  When both the government budget and the current account are in deficit

• 1.2.1 Money in the circular flow

• What is nominal income?

  Income expressed in currency
• What is the quantity equation?

  M x V = P x Y
• When do we have inflation whilst looking at the quantity equation?

  When the pricelevels increase faster than the money supply
• When the aggregate supply curve is vertical,what influence does changes in price levels have on production?

  Zero, since the supply curve is vertical, it will produce that amount no matter the prices