general macro revision

• what are the components of AD

  AD = C+I+G+(X-M)
• what factors shift SRAS ?

  1. raw material
  2. wages
  3. indirect taxes
  4. price of imported raw material
  5. improvements to quantity or quality of CELL
• chain of analysis inc in gdp ?

  inc in incomes>higher living standards>higher utility > more consumption >more economic growth > less unemployment
• limitations of gdp as a measure of living standards ?

  1. doesnt take into account shadow economy therefore its projected higher than what it is
• limitation of gdp per capita as a measure of living standards?

  • remittances and MNCs profit should no count as it flows out of the economy
  • as well as not taking into account things that should be valuable to living standards such as education
• recommend better measures of living standards

  HDI and GNI
• benefits of economic growth ?

  1. ^ income > ^ in living standards
  2. ^ jobs ^ income ^ employment
  3. ^ investment ^ profit
• costs of economic growth ?

  1. lower purchasing power ^ inflation
  2. inequality
  3. pollution externality due to new factories
  4. increase in budget defecit