A2 Macro Diagrams

In our revision session today we were discussing which diagrams can be used in A2 macro questions. Here is the initial list we came up with ... can students and teachers suggest more? I will happily put together a powerpoint with the diagrams suggested.

Gone fishing?

The Marine Bill comes before parliament today and yesterday the latest statistics were published on the state of the UK marine fishing industry. It is a good example of a sector in long term structural decline affected greatly by EU fishing quotas and also by the collapse in fish stocks brought about by over-fishing in years gone by.

Some snippets on the industry

Chart of the Day: Unfilled Vacancies

The seasonally adjusted number of unfilled vacancies in the UK economy has grown steadily over the last two years from just under 590,000 to a new high of 680,000. What might this figure be telling us?

UK National Accounts for 2007

The revised 4th quarter national income data for the UK has been published. There is a brief report here. Lehman Brothers have also released a pessimistic forecast for the UK predicting a one-in-three chance of an outright recession.

Now that the data is in I have revised my macro charts for showing the various components of aggregate demand for the UK - I often hand this out to AS macro students so that they can get a feel for the numbers and the difference in scale between for example household spending and capital investment. I have put some of these charts into the accompanying PowerPoint

Components of aggregate demand
UK economic cycle over the last 30 years
Real GDP since the mid 1970s
Macro objectives - growth, inflation and unemployment for the UK since 1989

I hope that these might be useful in macro revision sessions

PowerPoint file
Aggregate_Demand_UK.ppt

Zero unemployment - costs and benefits

Over at About Economics.com Mike Moffatt considers whether a zero rate of unemployment, even if it were attainable, might not be a good thing. He argues that “A positive rate of unemployment is the price we pay for technological development and for people chasing their dreams.” It is a good article for revising three of the main causes of unemployment and for thinking about the possible macroeconomic effects when the poll of surplus labour shrinks to a very low size.  My AS revision presentation on unemployment is here and my A2 revision presentations are here: (1) Natural rate (2) Philips Curve and the NAIRU

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).

A to Z of AS Macroeconomics!

Teaching at 5.30pm on a Friday afternoon as the fag end of term approaches isn’t great fun but after a successful SWOT analysis of the UK economy yesterday, I set my AS macro group a half hour challenge today - to produce an A to Z of macroeconomics as a prelude to their revision. Working in pairs, they tried to assemble twenty-six entries - it could be a concept, an issue in the news or perhaps a well known economist - anything so long as it had a macroeconomic connection! Similar to the game of Scattegories, teams only scored a mark when their answer was unique within the class.

Double points could be scored for suggestions such as Ben Bernanke, price pressures or credit crunch. Three marks for purchasing power parity! This led to some very creative and quirky answers.

Anyway ... here is a potted (albeit incomplete) summary of the responses. My job over the weekend is to produce a word document that provides a web link to a newpaper or BBC news story for each of them - so that they can access some articles linked to their suggestions whenever they want to. Can blog users suggest other entries? I am happy to email the word file over if you want to try this exercise before the end of term!

Unemployment - In Charts

The labour market provides a rich stream of information about what is happening in the real economy. It is often said that the number of people of work is a lagging indicator of the economic cycle - is that true this time around? Unemployment is still falling on both of the main published measures. And the number of people in work has never been higher. Thus far the signs from the labour market do not suggest an economy teetering on the brink of a slowdown or, worse still, a full-blown recession. My new ‘labour market in charts’ provides a set of fourteen up to the minute charts and is streamed here. The presentation can also be downloaded from the Tutor2u web site, it might be a useful resource if you are teaching aspects of unemployment at AS and A2 level.

Good Job?

At last, some good news for the British economy? Unemployment fell in the UK in the final quarter of 2007, with both the Claimant Count and Labour Force Survey measures recording decreasing joblessness. Overall, the employment rate has risen to 74.7%.

The Claimant Count recorded a drop of 10,800 to 794,600 and the LFS a fall of 61,000 to 1.61 million. As expected, the distribution of employment and unemployment differs from region to region, and also within regions.