Macro Notes Mind Map

Macro Notes Mind Map

1. Circular Flow of Income:

   • Closed Economy:
     • No government, No savings, No international trade
     • Agents:
       • Firms, Households
   • Open Economy
     • Has a government, Has savings, Has international trade, Has injections and leakages.

2. Factors of Production.

   • Labour, Capital, Land, entrepreneurs.

3. Economic cycle:

   • Boom, Downturn, Recession, Recovery.
     • recession is when the GDP falls in two consecutive quarters.

4. Inflation

   • Demand Pull inflation
     • Aggregate demand is greater than aggregate supply.
   • Cost push inflation
     • COP increases and firms pass this increase to consumers.
   • General and sustained increase in price level.

5. Injections

   • Exports, Gov spending, Investments.

6. Leakages

   • Imports, Tax, Savings.

7. Unemployment

   • Number of unemployed people actively seeking a job.

8. National income

   • Real Value
     • Takes into account inflation
   • Nominal value
     • Does not take into account inflation.

9. Aggregate demand.

   • AD= C+I+G+(X-M)

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