Title GA Tutors 2025 Econ Context.pdf ✅

1 2025 Macro & Micro Context Pack Table of Contents The Micro/Macroeconomics Evaluation Packs, as well as various other resources, can be found on gatutors.super.site Macroeconomic Objectives Page(s)  Inflation, Economic Growth, Unemployment ..........................................................................................  Trade - UK & International & Protectionism ............................................................................................ International Economy  Economic Development (The Asian Miracle), Exploitation of Workers, Tax Avoidance in LEDC’s Globalisation, Problems faced by LEDC’s ................................................................................................. Macroeconomic Policies  Monetary & Fiscal Policy ........................................................................................................................  Supply Side Policies & Productivity ........................................................................................................ Macro/Micro - Other  Theories beyond the specification: Prebisch-Singer hypothesis, Elasticity of Investment, Dutch disease, Marshall-Lerner Condition, Ricardian Equivalence |Arguments against a cut in corporation tax increasing Investment |Income/Wealth Inequality ......................................................................... Examples of Anti-Competitive Practises  Predatory Pricing, Price Discrimination  Brand Proliferation, Planned Obsolescence, Output restriction, Profit-push Inflation/Greedflation Market Structures, Privatisation/Nationalisation, Objectives of Firms & Creative Destruction  Oligopoly & Monopoly, Nationalisation/Privatisation ..............................................................................  Firms who don’t prioritise profit & Creative Destruction ......................................................................... Labour Market  Trade Unions & National Minimum Wage ................................................................................................. 2 3 4 5 6 7 8 9 10
2 Inflation UK Growth  The poorest decile of households in the UK spends 48% of household income on food and drink and housing, whereas the richest decile of households only spends 26% of their income on food and drink and housing. Inflation has mostly impacted housing bills and the cost of food/drinks, so you can understand its regressive consequences from the above statistic The wealthier members of society can also afford to invest in assets like shares in companies and property which are a hedge against inflation.  RHDI per person (real household disposable income fell by 4.3 per cent in 2022, the largest fall since ONS records began (Demonstrates the impact of the cost-of-living crisis)  Since the pandemic, the profit margins of the top 350 UK businesses have risen by 75%. For this reason, some estimates suggest that 60% of the UK’s current inflation can be attributed to greedflation  The UK economy grew by 0.6% in 2024, one of the slowest out of any G7 members Unemployment  The Joseph Rowntree Foundation found that only 20% of unemployed people are willing to move to find a job. This highlights the issue of geographical immobility of labour  20% of people of working age are economically inactive (not working or seeking employment)  10% of working families are in poverty (working poverty, ie earn less than 60% of the median income)  1/3 of people who claim universal credit have a job  National Minimum Wage (18-20) = £10/hour (16% increase from previous rate) Linktr.ee/gatutors
3 UK Trade  UK exports to the EU post Brexit fell by 16%. Despite the EU-UK Trade and Cooperation Agreement (TCA) that allowed for about 70% of UK exports to be free from tariffs, there remains non-tariff barriers such as customs formalities and checks, and the requisite for customs documentation for sanitary products are time consuming and costly. This has led to a 4% reduction in long run productivity compared to staying in the EU, highlighting the indirect financial implications of Brexit  The UK recently surpassed the Netherlands, Japan and France to become the 4th largest exporter in the world, largely driven by its strong surplus in services  In 2023, machinery and transport equipment made up for 36% of the UK's total imports. An increase in the price of imports may limit the productive potential of the economy.  Gas and Oil currently makes up 17% of the UK's total import  Over 60% of the UK's fertilisers are imported (responsible for rising food prices)  The UK has the 3 rd highest global inward FDI stock behind the US and China International Trade  Venezuela derives over 95% of its export earnings and almost half of government revenue from oil-related sectors.  90% of Bangladesh's exports are textiles. In order for Bangladesh to see HDI improvements, wages will likely need to rise, which may threaten their comparative advantage in the textiles industry as labour unit costs increase, unless they switch towards capital intensive labour. A shift towards capital intensive labour in the textiles industry will require diversification elsewhere however, otherwise unemployment will rise. Examples of Protectionism:  When in office, Donald Trump implemented 25% Tariffs on imported Steel from China. This was continued under Biden’s presidency and is unlikely to change in the close future as tensions between the US and China remain alive  The EU has a 10% tariff on all cars imported to EU member states Linktr.ee/gatutors