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20/11 H2 Casestudy Macroeconomics Section

Almost everything came out for essay in macroeconomic section...

here are some stuff that could be useful..

If you have the time, go through here

Budget (not much use but looking at it gives you some speed)

Fiscal Policy

Purchasing Power Parity - PPP
In other words, the exchange rate adjusts so that an identical good in two different countries has the same price when expressed in the same currency.

For example, a chocolate bar that sells for C$1.50 in a Canadian city should cost US$1.00 in a U.S. city when the exchange rate between Canada and the U.S. is 1.50 USD/CDN. (Both chocolate bars cost US$1.00.)


A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Central banks attempt to stop severe deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum.

Crowding Out Effect
Governments often borrow money (by issuing bonds) to fund additional spending. The problem occurs when government debt 'crowds out' private companies and individuals from the lending market. Increased government borrowing tends to increase market interest rates. The problem is that the government can always pay the market interest rate, but there comes a point when corporations and individuals can no longer afford to borrow.

Foreign direct investment (FDI)
is a measure of foreign ownership of productive assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization

What Does Hot Money Mean?
Money that flows regularly between financial markets in search for the highest short term interest rates possible.

The regulation of the money supply and interest rates by a central bank, such as the Federal Reserve Board in theU.S., in order to control inflation and stabilize currency.Monetary policy is one the two ways the governmentcan impact the economy. By impacting the effective cost of money, the Federal Reserve can affect the amount ofmoney that is spent by consumers and businesses.

Economic Growth

A positive change in the level of production of goods andservices by a country over a certain period of time.Nominal growth is defined as economic growth includinginflation, while real growth is nominal growth minus inflation. Economic growth is usually brought about by technological innovation and positive external forces.
If you have the time, you can read this about Keynesian..