Macroeconomics in a nutshell

Or Iceland, anyway…

The following graphic from The Economist this week gives an excellent opportunity to link the concepts of growth, inflation, unemployment and the current account.

Starter questions for classes to revise some basic theory before the Easter break:

(a) Explain why strong growth in 2004-5 feeds into higher inflation (note the time lag) and a growing current account deficit?

(b) Or are there other causal factors at play?

(c) Why does unemployment appear relatively unresponsive to changes in growth?

Extension questions for the more ambitious:

(d) What factors allowed OECD countries to enjoy low-inflation growth and falling unemployment over the data range shown?

(e) Why would the current account position of all OECD countries be unhelpful? (Note it is the only graph where this comparison is not shown).

Unit 2 Macro: Cyclical and Structural Economic Issues Facing the UK [23 May 2012]
Unit 2 Macro: Evaluation on Supply-Side Policies [21 May 2012]
Unit 2 Macro: Migration and the UK Economy [20 May 2012]
Unit 2 Macro: Positive and Negative Multiplier Effects [20 May 2012]
Unit 2 Macro: Measuring Unemployment in the UK [20 May 2012]
Unit 2 Macro: Measuring Inflation in the UK [20 May 2012]
Unit 2 Macro: Real Interest Rates [20 May 2012]
Q&A: What do we need to know about output gaps? [20 May 2012]
Unit 2 Macro: The Output Gap [20 May 2012]
Revision notes on unemployment [20 May 2012]
Unit 2 Macro: Bank Cuts UK growth Forecast for 2012 [16 May 2012]
Unit 1 Micro: Economics of a Minimum Wage [12 May 2012]
Unit 2 Macro: Revision Notes on Supply-side Policies [10 May 2012]
Unit 2 Macro: Model answer for revision data question [9 May 2012]
Unit 3 Micro: The Dawn of a Shareholder Spring? [8 May 2012]
Unit 2 Macro: Monetary Policy and Inflation Glossary [5 May 2012]
Unit 2 Macro: Unemployment Glossary [5 May 2012]
Unit 2 Macro: Economic Cycle Glossary [5 May 2012]
Unit 2 Macro: Aggregate Demand Glossary [5 May 2012]
Macro Revision - Key Statistics on the UK Economy [4 May 2012]
Unit 1 Micro: Using the Cost-Benefit Principle [30 Apr 2012]
Macro Revision: Putting Things in Context [29 Apr 2012]
Unit 4 Macro: Spanish unemployed head to Argentina [29 Apr 2012]
Unit 4 Macro: The Euro Zone Crisis (Revision) [22 Apr 2012]
Unit 2 Macro: Better news on jobs in the UK? [19 Apr 2012]
Unit 2 Macro: Skills Shortages Hold Back Recovery [12 Apr 2012]
Superb article on unemployment [8 Apr 2012]
Unit 2 Macro: Inflation and the Business Environment [6 Apr 2012]
Unit 2 Macro: How the Economic Cycle affects Businesses [6 Apr 2012]
Unit 2 Macro: Revision on Real Economic Data [2 Apr 2012]
Unit 4 Macro: Unemployment Scarring Effects [2 Apr 2012]
Unit 2 Macro: Revision on Real Disposable Income [2 Apr 2012]
Unit 4 Macro: Pain in Spain as Fiscal Austerity Bites [1 Apr 2012]
Posen on slower growth in the UK compared to the USA [30 Mar 2012]
Blanchflower calls for more action to address youth jobless crisis [28 Mar 2012]
Life in the Slow Lane - UK Growth in 2011 Lags the Euro Area [28 Mar 2012]
Beyond the Bike - Monetary Policy in Africa [28 Mar 2012]
Unit 4 Macro: Evaluating 3 Years of Quantitative Easing [27 Mar 2012]
Unit 2 Macro: Seasonal and Structural Unemployment [15 Mar 2012]
Unit 4 Macro: Video Resources on the Euro Crisis [10 Mar 2012]
Unit 2 Macro: Policies to Drive Economic Recovery [9 Mar 2012]
Unit 1 Micro - Labour Migration and the Economy [5 Mar 2012]
Unit 2 Macro: Might Oil Prices Bring another Recession? [4 Mar 2012]
Economies hooked on central bank stimulants? [4 Mar 2012]
Unit 2 Macro: A Man Regains his Self Respect [25 Feb 2012]
Unit 1 Economics: Panorama - Poor America [17 Feb 2012]
Unit 4 Macro: King on the UK Economy [15 Feb 2012]
Economics Explained, by Evan [12 Feb 2012]
Unit 2 Macro: Growth and Development - Some Indicators [30 Jan 2012]
Unit 2 Macro: Signs of Progress for Zimbabwe [29 Jan 2012]
Unit 2 Macro: Focus on China - Inflation [26 Jan 2012]
Unit 4 Macro: Money, Debt and the New World Order [22 Jan 2012]
Unit 2 Macro: Living below the Breadline [19 Jan 2012]
Inflation - what’s up, what’s down and what’s going to happen next [17 Jan 2012]
Hopes and Fears 2012 [10 Jan 2012]
Unit 2 Macro: Quantitative Easing in the UK [8 Jan 2012]
Unit 2 Macro: A Jobs Boost for the US Economy [8 Jan 2012]
Unit 2 Macro: Revision Quiz on Economics of Unemployment [5 Jan 2012]
Unit 4 Macro: Video Resources on Unemployment [3 Jan 2012]
Unit 2 Macro: The UK Housing Market in 2011 [26 Dec 2011]
Unit 2 Macro: Long Term Unemployment - A Human Story [15 Dec 2011]
Rising prices and falling real incomes [13 Dec 2011]
Unit 2 Macro: Will a Youth Jobs Subsidy Work? [30 Nov 2011]
Where is the UK Economy? National Output [22 Nov 2011]
UK unemployment in November 2011 - a video overview [22 Nov 2011]
Beyond the Bike - The Value of Money [19 Nov 2011]
Unit 2 Macro: A Prezi on Unemployment Policies [16 Nov 2011]
AS Macro: The State of British Business [13 Nov 2011]
Unit 4 Macro: America’s hour-glass economy [9 Nov 2011]
Unit 2 Macro: Video Clips on Unemployment [6 Nov 2011]
Australia lowers interest rate to 4.5% [1 Nov 2011]
Unit 4 Macro: Unemployment Chart Resource Download [29 Oct 2011]
Unit 2 Macro: A Widening Regional Divide in Life Expectancy [19 Oct 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
UK Unemployment in October 2011 [12 Oct 2011]
Unit 4 Macro: Unit Labour Costs and Inflation [12 Oct 2011]
Unit 4 Macro: UK Inflation Charts [12 Oct 2011]
Why Is Macroeconomics Such A Mess? [11 Oct 2011]
University Challenged [11 Oct 2011]
NMW: Classical real-wage unemployment [3 Oct 2011]
Unit 4 Macro: Greek Economy at Default’s Door [25 Sep 2011]
Unit 4 Macro: IMF Flags up Risks of Double Dip [20 Sep 2011]
Inflation in India [18 Sep 2011]
Unit 2 Macro: Interest Rates and Income Inequality [16 Sep 2011]
Study Note - Macroeconomic policy objectives [16 Sep 2011]
Public vs Private Sector - the world’s largest employers. [12 Sep 2011]
Monetary Policy Roundtable [25 Jul 2011]
“We need to make more stuff, using the same number of people…” [16 Jul 2011]
Unit 4 Macro: Dangers of High Inflation [11 Jul 2011]
Unit 2 Macro: Reducing Unemployment after a Recession [11 Jul 2011]
Structural unemployment in the UK - insights for 2011 [13 Jun 2011]
A2 Macro: Consumer Spending [30 May 2011]
AS Macro Key Term: Supply-Side Policies [25 May 2011]
AQA Macro: Remember to revise inflation [25 May 2011]
AS Macro Key Term: Demand Pull Inflation [24 May 2011]
AS Macro Key Term: Deflation [24 May 2011]
AS Macro Key Term: Cost Push Inflation [24 May 2011]
AS Macro Key Term: Inflation [24 May 2011]
AS Macro Key Term: Trend Growth [23 May 2011]
AS Macro Key Term: Recession [23 May 2011]

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