Theme 2 · Macroeconomics · Papers 2 and 3
The UK economy: performance and policies
The first macroeconomics theme. How we measure an economy, what makes it grow or stall, and the fiscal, monetary and supply-side tools a government reaches for, along with the trade-offs between them.
Topics in this theme
Topic pages
Measures of economic performance
Economic growth, inflation, employment and unemployment, and the balance of payments on current account.
Content coming
Aggregate demand
The components of AD, the AD curve, and the determinants of consumption, investment, government spending and net trade.
Content coming
Aggregate supply
Short-run and long-run aggregate supply, and the Keynesian and classical views of the AS curve.
Content coming
National income and the multiplier
The circular flow of income, injections and withdrawals, and the multiplier process.
Content coming
Economic growth
Actual and potential growth, output gaps, the business cycle, and the benefits and costs of growth.
Content coming
Macroeconomic objectives and policies
The policy objectives and the fiscal, monetary and supply-side instruments used to pursue them, with their conflicts.
Content coming
The template
Each topic page will follow the same shape as the worked example in Theme 1: the idea, the diagram, the chain and the evaluation. Theme 2 leans hard on the AD/AS diagram, so expect one on almost every page here.