the various changing factors which influence it.Theseinclude investment levels,the multiplier effect,inflation.savings,confidence.interest rates andexchange rates Equilibrium national incme is determined using aggregate supply and aggregate demand analysis. Business cycles or trade cycles are the continual sequence of rapid growth in national income.followedby a slow-down in growth and then a fall in national income.After this recession comes growth again,and when this has reached a peak,the ycle turs into recession once more High rates of inflationare conomy.Inflation redistributes income and wealth Uncertaintyabout the value of money makes business planning more difficult.Constantly changing prices imposeextra costs Demand pull inflation arises from an excess of aggregate demand over the productive capacity of theeconomy A surplus or deficit on the balance of payments usually means a surplus or deficit on the currentaccount 2.基本概念和知识点Basic concepts ,Unemployment,Stagnation,Interationl payments, monetary policy 3.问题与应用Questions and applications The government of counry C provides free medical treatment to all its citizens.However. for more affluent citizens,asmall charge is made if they need medication.The government has recenty decided this charge by a moderate amount to refect the increasing cost of the medicines Cost push infation arises from increases in the costs of production. The number of unemployed at any time is measured by government statistics Economic growth may be measured by increases in the real gross national product(GNP per head ofthe population. policy objectives relate growth,infati unemployment and the balanceof pavments. Fiscal policy provides a method of managing aggregate demand in the economy If a government decides to use fiscal policy to influence demand in the economy,it can choose eitherexpenditure changes or tax changes as its policy instrument A government must decide how it intends to raise tax revenues.from direct or indirect taxes and inwhat proportionstax revenues will be raised from each sour Direct taxes have the quality of being progressive or proportional.Income tax is usually progressivewith high rates of charged on higher bands of taabe incme. can be regressive,when the taxes are placed on essential commodities or commodities consumed by poorer people ingreater quantities Monetary policy uses money supply,interest rates or credit controls to influence aggregate 1111 the various changing factors which influence it. Theseinclude investment levels, the multiplier effect, inflation, savings, confidence, interest rates andexchange rates. Equilibrium national income is determined using aggregate supply and aggregate demand analysis. Business cycles or trade cycles are the continual sequence of rapid growth in national income, followedby a slow-down in growth and then a fall in national income. After this recession comes growth again,and when this has reached a peak, the cycle turns into recession once more. High rates of inflation are harmful to an economy. Inflation redistributes income and wealth. Uncertaintyabout the value of money makes business planning more difficult. Constantly changing prices imposeextra costs. Demand pull inflation arises from an excess of aggregate demand over the productive capacity of theeconomy. A surplus or deficit on the balance of payments usually means a surplus or deficit on the currentaccount. 2.基本概念和知识点 Basic concepts Inflation, Unemployment, Stagnation, International payments, disequilibrium, fiscal and monetary policy 3. 问题与应用 Questions and applications The government of country C provides free medical treatment to all its citizens. However, for more affluent citizens, a small charge is made if they need medication. The government has recently decided to increase this charge by a moderate amount to reflect the increasing cost of the medicines. Cost push inflation arises from increases in the costs of production. The number of unemployed at any time is measured by government statistics. Economic growth may be measured by increases in the real gross national product (GNP) per head ofthe population. Macroeconomic policy objectives relate to economic growth, inflation, unemployment and the balanceof payments. Fiscal policy provides a method of managing aggregate demand in the economy. If a government decides to use fiscal policy to influence demand in the economy, it can choose eitherexpenditure changes or tax changes as its policy instrument. A government must decide how it intends to raise tax revenues, from direct or indirect taxes, and inwhat proportions tax revenues will be raised from each source. Direct taxes have the quality of being progressive or proportional. Income tax is usually progressive,with high rates of tax charged on higher bands of taxable income. Indirect taxes can be regressive,when the taxes are placed on essential commodities or commodities consumed by poorer people ingreater quantities. Monetary policy uses money supply, interest rates or credit controls to influence aggregate