Micro/Macro effects

Question 1

Effects of a weak exchange rate

Answer 1

Micro - ⬆️ Prices, ⬆️ COP (lowered profitability = less reinvested)

Macro - ⬆️ CAB, ⬆️ Net Exports

Question 2

Effects of protectionist policies (eg tariff)

Answer 2

Micro - ⬆️ prices, domestic rev ⬆️ foreign rev ⬇️

Macro - ⬆️ gov revenue, ⬆️ CAB

Question 3

Effects of supply side policies

Answer 3

Micro - ⬆️ productivity, can solve market failure

Macro - ⬆️ growth, ⬇️ inflation, ⬆️ gov spending = ⬆️ budget deficit

Question 4

Effects of privatisation

Answer 4

Micro - ⬆️ prod and allo efficiency, cost cutting in safety areas (welfare loss)

Macro - ⬆️ LRAS (more output from money saved from efficiency)
⬇️ lowered prod costs = increase comp in int markets

Question 5

Effects of nationalisation

Answer 5

Micro - ⬆️ allo eff, ⬆️ eos, ⬇️ prices and higher quality

Macro - ⬆️ cost of running, ⬆️ employment (public is not prof max)

Question 6

Effects of nationalisation

Answer 6

Micro - ⬆️ allo eff, ⬆️ eos, ⬇️ prices and higher quality

Macro - ⬆️ cost of running, ⬆️ employment (public is not prof max)

Question 7

Fishers equation

Answer 7

MV (what is bought) = PQ (what is sold)

M money supply
V velocity of circulation
P price level
Q quantity of goods sold