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Published:
December 14, 2015

Macroeconomics For Dummies - UK

Overview

An accessible and engaging introduction to the big picture of UK and international economics

Are you studying macroeconomics, but don't know inflation from stagflation? Have no fear! This easy-to-understand guide, written specifically for the UK market, is packed with real-world examples and cases that easily illustrate the key concepts you'll need to know to fully grasp macroeconomics and ace your exams. Taking a fun, step-by-step approach to the topic, this great guide provides an engaging introduction to macroeconomics and then delves into more specific topics, such as business cycles, inflation, unemployment, domestic output, monetary policy, and much more.

When it comes to the interaction of politics, business decisions, consumer actions, and monetary policy, the study of economics is international in scope. That

means you must understand not just the economies of nations, but also the interrelatedness of national economies throughout the world. This easy, accessible guide will help you:

  • Find out how many different financial, business, consumer, and political factors interact to create the overall economic reality of nations
  • Understand business cycles, economic growth, and fiscal and monetary policies
  • Study the relationships of various economic indicators, such as inflation, unemployment, and domestic output
  • Gain a solid understanding of macroeconomics by building on microeconomic principles and using real-world examples

If you're struggling with your economics course or you need to get up to speed on the topic of macroeconomics quickly, Macroeconomics For Dummies has you covered!

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About The Author

Manzur Rashid, PhD, is a Lecturer of economics at University College, London. Peter Antonioni is a senior teaching fellow at the Department of Management Science and Innovation, University College, London, and coauthor of Economics For Dummies, 2nd UK Edition.

Sample Chapters

macroeconomics for dummies - uk

CHEAT SHEET

Macroeconomics is the study of the economy as a whole. What follows are summaries of some key information about how the economy works, including the basics of fiscal and monetary policy, the key summary statistics that macroeconomists examine in order to assess the health of an economy, and how the economy behaves in the short- and long-term.

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Many people prefer to avoid equations, but the ones described below are vital to understanding macroeconomics. So, take a look! They’ve proved themselves immensely useful over the years. Production function Y = f(K, L) The production function says that a nation’s output depends upon two things: The available factors of production (K, L).
Economics can seem overwhelming, especially when examining statistics. Take a look at the following information to gain a better understanding of those statistics. Macroeconomists look at the following summary statistics to assess the health of an economy: Real GDP (or output): The total value of goods and services produced in an economy in one year.
Bob Solow has carried out some of the most important work in macroeconomics by creating the Solow model of economic growth. His benchmark model is still taught in universities throughout the world. Here is a summary of its key lessons: The more that people in an economy save of their income, the greater the amount of investment.
Macroeconomics is the study of the economy as a whole. What follows are summaries of some key information about how the economy works, including the basics of fiscal and monetary policy, the key summary statistics that macroeconomists examine in order to assess the health of an economy, and how the economy behaves in the short- and long-term.
The UK, like the US, undertook a substantial amount of quantitative easing (QE) over the past few years. Quantitative easing involves creating large amounts of electronic money and then using it to purchase mainly government bonds. By doing so the central bank increases the amount of money in circulation. Over the years, the Bank of England has acquired around £375 billion worth of UK government bonds due to quantitative easing.
The important IS–LM model shows how the economy responds to fiscal and monetary policy in the very short run (that is, when prices are fixed). The famous British economist John Hicks came up with it as a simple graphical representation of Keynes’s ideas in his General Theory. Here’s how it goes. The economy is made up of two large markets: Goods market: Where all goods and services are traded.
Our lives are constantly being influenced by economic policy. But for many, the policy is just lots of words, with no real meaning. This should help you understand what is behind the policy. Policy makers undertake three main types of economic policy: Fiscal policy: Changes in government spending or taxation. Monetary policy: Changes in the money supply to alter the interest rate (usually to influence the rate of inflation).
How do you know how changes in the economy will affect you? You should observe the change over time. Macroeconomists consider these three timeframes when assessing the impact of a change on the economy: Short run: Prices are sticky in the short run, which means that fiscal and monetary policy (or indeed any change in aggregate demand) has real effects.
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