Short-term growth

Short-term growth — Actual growth in the PPC model

Short-term growth — Role of AD in the AD/AS model

Long-term growth

Long-term growth — Shifts of the PPC (growth in production possibilities)

Long-term growth — Role of LRAS in the AD/AS model

Measurement of economic growth

Consequences of economic growth, including:

Consequences of economic growth, including: — impact on living standards

Unit 3: Macroeconomics

impact on the environment

impact on income distribution

Measurement of unemployment and the unemployment rate

Difficulties of measuring unemployment

Causes of unemployment—cyclical (demand deficient), structural, seasonal, frictional

Natural rate of unemployment—sum of the structural, seasonal, frictional unemployment

Costs of unemployment—personal costs, social costs, economic costs

Measuring the inflation rate, using consumer price index (CPI) data

The limitations of the CPI in measuring inflation

Causes of inflation—demand-pull and cost-push

Costs of a high inflation rate—uncertainty, redistributive effects, effects on saving, damage to export competitiveness, impact on economic growth, inefficient resource allocation

Causes of deflation—changes in AD or SRAS

Disinflation and deflation

Costs of deflation—uncertainty, redistributive effects, deferred consumption, association with high levels of cyclical unemployment and bankruptcies, increase in the real value of debt, inefficient resource allocation, policy ineffectiveness

Relative costs of unemployment versus inflation

Measurement of government (national) debt as a percentage of GDP

Relationship between a budget deficit and government (national) debt

Costs of a high government (national) debt—debt servicing costs, credit ratings, impacts on future taxation and government spending

Potential conflict between macroeconomic objectives

Potential conflict between macroeconomic objectives — Low unemployment and low inflation

Potential conflict between macroeconomic objectives — Trade-off between unemployment and inflation (HL only)

Potential conflict between macroeconomic objectives — Short-run and long-run Phillips curve

High economic growth and low inflation

High economic growth and environmental sustainability

High economic growth and equity in income distribution