chapter 6: the application of macroeconomic policy instruments and the international economy.

Fiscal policy: the taxation and the spending decisions of a government.

• Fiscal policy is one of 3 main economic policies that governments use to influence economic activity. the fiscal policy covers the taxation and spending decisions of a government. their aim is to influence AD( aggregate demand).

Progressive tax: a tax that takes a higher percentage from the income of the rich.
Regressive tax( VAT): a tax that takes a greater percentage from the income of the poor. These are 2 types of taxes that is the most important tax revenue in the UK.

Government spending can be divided into:

- Capital expenditure, which is hospitals, schools, roads, etc...

- Current spending, which is public services, medicines, teaching's pay, etc...

- Transfer payments, which is money transferred from the taxpayers.

- Debt interest payment,which is payment made to the holders of government debt.

Monetary policy: central bank and/or government decisions on the rate of interest, the money supply and the exchange rate.

• The monetary policy and the fiscal policy are both seek to influence AD

Supply- side policies: policies designed to increase AS by improving the efficiency of labour and the product markets.

• if the Monetary policy and the Fiscal policy seek to influence AD, supply-side policy aim to influence AS.

Policies to reduce unemployment:

• Fiscal policy and Monetary policy can be reduced the unemployment by cutting taxes and increase the government spending, it leeds to the AD increase, then more jobs are created.
• The Supply-side policy can be implemented to increase economic incentives and the quality of labour services offered by the unemployed.

these are 2 main types of inflation:

• Cost push inflation: increases in the price level caused by increases in AD
• demand full inflation: Increases in the price level caused by increases in the cost of production.

Policies to control inflation:

• Cost push inflation: if the government believes that inflation caused by increase in wages rate, they'll try to restict the wage rise, they can also try to lower firms' cost by reducing corporation tax.
• Demand pull inflation: to reduce demand pull inflation, a government could, for instance, raise income tax, it make the people ability to spend.

Policies to promote economic growth:

• in short run: the government could use the Fiscal policy and Monetary policy to increase the AD.
  
• in long run: the government try to increase in country's output which is using the supply side policy to increase the AS.

Policies to improve the balance of payments:

• in short run: there are 3 main ways:

1. exchange rate adjustment
2. deflationary demand management
3. import restrictions

• in long run: implement supply side policy, the government may give subsidies to infant industries in the belief that they have the potentail to grow and become internationally competitive.

Policies to improve the balance of payments usually focus on instruments to influence the current account position.

Consumer and Producer Surplus!!!!

Consumer Surplus is the different between the price that the consumer prepared to pay and the actual price paid.

Producer Surplus is the difference between what producers are willing and able to supply a good for and the price they actually receive.

Diagram:

Bath University

what's a cool Vietnamese guys!!!!! =))

today we went to the Bath University, even we spend 2 hours to do nothing in the Bath city, but we still have a lot of fun!!!!!!!!!

it's me! :P

Ken like what's up guys? :))

look like he wants to find a toilet! =))

Oh Lex! he's dancing =)) =))

now he's being normal! :))

what's is Lex doing? =))

he was decide to bee here or not? =))

then he went over there to bee =)) =))

ok good morning lady and gentleman, today we gonna look up the AS economic test 1:

1/define the economic problem? (4 marks)

2/ Explain 'capital' as a factor of production? (5 marks)

3/ define 'factor endowment'? (5 marks)

4/ using a diagram explain 'opportunity cost'? (7 marks)

5/explain how 'specialisation lies at the heart of the modern global economy'? (5 marks)

6/ list four risks of specialisation? (4 marks)

7/ define 'developing economy'? (3 marks)

8/ define 'economic system'? (3marks)

9/ using a diagram showing supply and demand, explain what happens to the market for steel if
demand for cars falls? (7 marks)

10/what is the difference between derived demand and composite demand? (4 marks)

11/ using the diagram to show how demand for beef rises, this affects the market for leather? (6 marks)

12/ what is joint supply? (3 marks)

13/ who is the Prime Minster of UK? (2 marks)

14/what is Chris's favorite word? (2 marks)
DAILY _ _ _ _

alright the answers will at the comments, if anyone wants to try, you're more welcome to!!!!!!

Demand and Supply!!!!!

hey the AS students should watch it and understand this video ( completely copy from the Chris's blog)

ok the detail of the video is: when demand increases supply extenses, and when demand decreases supply contracts. If supply increases demand extense, and supply decreases demand contracts. Increasing is shift to the right and Decreasing is shift to the left. Contract and Extense are a moverment alone the curve.

natural calamity!!!!!!!!!!!

if you read the news, you'll see the natural calamity is affect a lot to the South East Asia countries( such as Vietnam, Indonesia, Philippine...). Especially, it happen at the same time or the day near it. it killed a lot of people and destroy a lot of houses. such as the Ketsana's storm killed at least 293 people and made 736.000 people left their house in Philippine.
i think it's gonna affect the economics go down, because of it, the government have to spend money to help the victim of the natural calamity, and to rebuild those houses that the natural calamity has destroyed. If they want to do it, they have to increase the taxes to get more money, then the unemployment is inflation, so the economic could go down.

Recession in football !!!

the recession is two quarters -ve economics growth. The football club is trying to rise their profit, it's mean they're trying to rise their total revenue and total cost by Merchandise and price of tickets. But because of recession, it makes them difficult to raise finance ( difficult to sale, to borrow, Public Limited Company, and Sponsorship). So they try to raise it by play more matches( friendly matches) and win the game, they also do the price discrimination ( different prices, but the same service).