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SingaporeEconomics

National Income and Macroeconomic Aims

5 dot points across 5 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

How do AD and AS set the price level and output, and why does an injection raise income by more than itself?

Determine macroeconomic equilibrium using AD-AS and explain the multiplier process and the size of the multiplier
A focused answer to the H2 Economics learning outcome on macroeconomic equilibrium and the multiplier. How AD and AS set output and the price level, and why an injection raises national income by a multiple through the multiplier process.
10 min answer →

What is total spending in an economy made of, and why does the AD curve slope downward?

Define aggregate demand and its components, explain why the AD curve slopes downward, and identify what shifts it
A focused answer to the H2 Economics learning outcome on aggregate demand. The four components of AD, why the AD curve slopes downward, and the determinants that shift it, set in the context of an open economy.
9 min answer →

How much output will an economy supply at each price level, and how does this differ in the short and long run?

Explain short-run and long-run aggregate supply, the shapes of the AS curve, and what shifts each
A focused answer to the H2 Economics learning outcome on aggregate supply. The upward-sloping short-run AS curve, the vertical or Keynesian long-run AS, and the determinants that shift each, including productive capacity.
9 min answer →

How do we measure the size of an economy, and why do three approaches give the same answer?

Explain the circular flow of income and how national income is measured, including GDP, injections and withdrawals
A focused answer to the H2 Economics learning outcome on national income. The circular flow with injections and withdrawals, the three equal methods of measuring GDP, and the difference between nominal and real, and GDP and GNI.
9 min answer →

What does a government try to achieve for the whole economy, and why can the aims conflict?

Identify the macroeconomic aims of growth, low inflation, low unemployment, a healthy balance of payments and equity, and explain the conflicts between them
A focused answer to the H2 Economics learning outcome on macroeconomic aims. The goals of sustained growth, low inflation, low unemployment, a sustainable balance of payments and equity, and the trade-offs that force governments to prioritise.
9 min answer →