Macroeconomics

Im currently doing AS Economics (OCR Board)

I really need help in starting my revision for Macro.
I find Micro pretty straight forward (excpet for the essays) but I'm totally lost for Macroeconomics.

Any help/suggestions would be much appreciated! :smile:

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Reply 1

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Reply 2

cole-slaw

What does the IS curve show? Why? What does the LM curve show? Why?

You need to understand these bits really, really well.

Reply 3

umieee

Original post by cole-slaw

What does the IS curve show? Why? What does the LM curve show? Why?

You need to understand these bits really, really well.

Whats IS and LM? :\

Reply 4

cole-slaw

Surely A-level economics covers the ISLM?

If not I apologise, I do not know what is on the syllabus.

Original post by umieee

Whats IS and LM? :\

Reply 5

umieee

Original post by cole-slaw

Surely A-level economics covers the ISLM?

If not I apologise, I do not know what is on the syllabus.

I don't think so. or maybe I've learnt it as something else

Reply 6

itsn0b0dy

Original post by cole-slaw

Surely A-level economics covers the ISLM?

If not I apologise, I do not know what is on the syllabus.

I'm doing AS + I did GCSE + do a fair amount of reading and have never come across this.

AS macro is focussed around AS/AD + macro goals and policies

Reply 7

cole-slaw

Original post by umieee

I don't think so. or maybe I've learnt it as something else

Have you learnt about interest rates and savings?

Reply 8

cole-slaw

Original post by itsn0b0dy

I'm doing AS + I did GCSE + do a fair amount of reading and have never come across this.

AS macro is focussed around AS/AD + macro goals and policies

The aggregate demand curve is normally derived from the ISLM... I wonder how you have approached it then

Reply 9

umieee

Original post by itsn0b0dy

I'm doing AS + I did GCSE + do a fair amount of reading and have never come across this.

AS macro is focussed around AS/AD + macro goals and policies

What exam board you doing?

Reply 10

umieee

Original post by cole-slaw

The aggregate demand curve is normally derived from the ISLM... I wonder how you have approached it then

They've just taught us the aggregate demand curve as it is, and the factors that affect the shifts to the curve.. no mention of ISLM

Reply 11

samthemiller

Now I want to know what ISLM is

Reply 12

cole-slaw

Original post by umieee

They've just taught us the aggregate demand curve as it is, and the factors that affect the shifts to the curve.. no mention of ISLM

Oh right, so tell me why it is the shape it is (downward sloping) and what makes it move.

Reply 13

cole-slaw

Original post by samthemiller

Now I want to know what ISLM is

Its two equations that represent equilibrium in different markets for certain levels of national output and interest rates.

The IS (Investment and Savings) curve shows the equilibrium in the real goods market, basically if interest rates go down, then it is cheaper to borrow money so companies borrow more money to invest, so the national output goes up. So it is a downward sloping line.

The LM (Liquidity and Money Supply) curve shows the equilibrium in the money markets, basically if national output goes up, then people need more money to hand so they save less and interest rates go up to compensate. So it is an upward sloping line.

Together they make a cross. The middle of the cross is the equilibrium point of the economy.

(edited 10 years ago)

Reply 14

umieee

Original post by cole-slaw

Oh right, so tell me why it is the shape it is (downward sloping) and what makes it move.

We usually get a question and then apply it to the graph?
The AD/AS graph will always consist of the demand/supply curves,
and they can change according to the question..

Reply 15

cole-slaw

Original post by umieee

We usually get a question and then apply it to the graph?
The AD/AS graph will always consist of the demand/supply curves,
and they can change according to the question..

I want to see if you understand it. Which line is which on an ADAS graph?

Reply 16

Pride

Original post by umieee

You have the OCR textbook I assume. I'm trying to remember off the top of my head what it covers, so bear with me. I suggest some of the most important things to make sure you've nailed are the 4 main economic indicators: inflation, unemployment, balance of payments and national income/national output/real GDP. Can you show these things on the AS/AD graph. Then do you know about the 3 types of policy, fiscal, monetary and supply-side. You've got to be able to discuss these, and use diagrams to illustrate them. You'll also need to learn the definitions.

The highest marks come from analysis and evaluation, so practice practice practice. The textbook and past papers should help you a lot. Ask your teachers questions if you need help, ask your friends and here on TSR. Good luck.

Reply 17

umieee

Original post by cole-slaw

I want to see if you understand it. Which line is which on an ADAS graph?

The demand curve is downwards sloping and the supply curve is upwards sloping- diagonally. The point at where they meet is the equilibrium, and the points of here would be the price and quantity demanded and supplied.

Reply 18

umieee

Original post by Pride

I know like bits and bops, and really worried about the 18 mark essay at the end because it could be on anything! But thankyou! I'l go through the 4 main indicators and then work on demand and supply side policies..

Reply 19

cole-slaw

Original post by umieee

The price level, yes. Its not a specific price because its aggeregate demand and supply.

Why is the supply curve upward sloping? What does that tell you?