Economics HL
4
Chapters
117
Notes
Unit 1 - Intro To Econ & Core Concepts
Unit 2 - Microeconomics
Unit 3 - Macroeconomics
Unlocking National Income Stats: What They Reveal About Economies
GNI vs. GDP: Which Better Measures Economic Well-Being?
Understanding Aggregate Demand Beyond GDP
Understanding Aggregate Supply Monetarist Vs. Keynesian Views
Understanding Equilibrium Monetarist Vs Keynesian Models Explained
Understanding Macroeconomic Equilibrium: A Deep Dive
Economic Growth Blessing or Curse for Living Standards
Understanding Unemployment Myths, Measurements, and Meaning
Deflation Demystified: Why Lower Prices Aren't Always Better!
Understanding Inflation Insights & Implications For Economies
Understanding Equality Vs. Equity In Income Distribution
Understanding Economic Inequality Income vs. Wealth
Unveiling Income Inequality The Power of Lorenz Curve & Gini Coefficient
Understanding 2018's Lorenz Curve Income Quintile Insights
Understanding Poverty Absolute Vs. Relative Explained
Understanding Poverty Beyond Just Income Measures
Understanding Globalization, Technology, and Income Inequality Impact
Understanding Taxes From Direct To VAT Explained!
Understanding Tax Rates ATR vs MTR Explained
Unlocking Equity: How Taxation Curbs Income Inequalities
Strategies To Combat Poverty Beyond Traditional Taxation
Unraveling Money From Basics To Banking & Policy Mechanics
Understanding The Demand For Money: A Deep Dive
Central Bank's Tools Steering Money Supply & Interest Rates
Impact of Contractionary Monetary Policy on Aggregate Demand
Monetary Policy Key Strengths and Limitations Explained
Mastering Fiscal Policy How Government Spending Influences Economy
Unlocking The Power Of The Keynesian Multiplier
Unveiling Fiscal Policy: Key Advantages & Notable Disadvantages
Unlocking Economic Growth: The Power of Supply-Side Policies
Boosting Growth: The Power of Supply-Side Policies
Unveiling Supply-Side Policies: Market-Based Vs. Interventionist Insights
Unlocking Macroeconomic Objectives: Tools & Tactics for Policymakers
Mastering Price Stability: Fiscal vs. Monetary Policies
Effective Policies To Counter Different Types Of Unemployment
Macroeconomic Dilemma: Unemployment Vs. Inflation
Unit 4 - The Global Economy
Economics HL
Unit 3 - Macroeconomics
Impact of Contractionary Monetary Policy on Aggregate Demand
480 words
3 mins read
Last edited on 5th Nov 2024
Table of content
What's happening when inflation strikes
- Inflation = Prices rising fast! 😲
- Imagine your favorite chocolate bar cost suddenly skyrocketing. Not cool, right?
- Inflationary Gap = Economy's going too fast, like a car speeding.
Policymakers to the rescue
- They'll use contractionary (or tight) monetary policy to slow things down.
- Imagine they're hitting the brakes on the economy car.
How do they do it
- Increase interest rates by decreasing the money supply
- Selling bonds through open market.
- Like turning down the tap of money.
The effects on spending (AD- Aggregate Demand)
- Consumption (C)
- Borrowing becomes more expensive: Like if your credit card's interest skyrocketed, you'd buy fewer video games.
- People save more, spend less: Like putting more allowance in the piggy bank instead of buying snacks.
- Investment (I)
- Businesses find it costly to borrow: So they'll build fewer new shops.
- Opportunity cost rises for investment: If you had to choose between buying a bike or investing the money, higher interest might make you invest.
- Net Exports (NX)
- Country’s currency value goes up: Imagine the dollar getting a power-up; it costs more for other countries to buy our stuff.
- Exports become expensive, decreasing sales abroad: Like if our chocolate bars cost too much in another country, they'd buy fewer.
Unlock the Full Content! 
Dive deeper and gain exclusive access to premium files of Economics HL. Subscribe now and get closer to that 45 🌟
Economics HL
Unit 3 - Macroeconomics
Impact of Contractionary Monetary Policy on Aggregate Demand
480 words
3 mins read
Last edited on 5th Nov 2024
Table of content
What's happening when inflation strikes
- Inflation = Prices rising fast! 😲
- Imagine your favorite chocolate bar cost suddenly skyrocketing. Not cool, right?
- Inflationary Gap = Economy's going too fast, like a car speeding.
Policymakers to the rescue
- They'll use contractionary (or tight) monetary policy to slow things down.
- Imagine they're hitting the brakes on the economy car.
How do they do it
- Increase interest rates by decreasing the money supply
- Selling bonds through open market.
- Like turning down the tap of money.
The effects on spending (AD- Aggregate Demand)
- Consumption (C)
- Borrowing becomes more expensive: Like if your credit card's interest skyrocketed, you'd buy fewer video games.
- People save more, spend less: Like putting more allowance in the piggy bank instead of buying snacks.
- Investment (I)
- Businesses find it costly to borrow: So they'll build fewer new shops.
- Opportunity cost rises for investment: If you had to choose between buying a bike or investing the money, higher interest might make you invest.
- Net Exports (NX)
- Country’s currency value goes up: Imagine the dollar getting a power-up; it costs more for other countries to buy our stuff.
- Exports become expensive, decreasing sales abroad: Like if our chocolate bars cost too much in another country, they'd buy fewer.
Unlock the Full Content!
Dive deeper and gain exclusive access to premium files of Economics HL. Subscribe now and get closer to that 45 🌟
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