Quick Revision Quiz

Keynesian AS curve

→ Low productivity increases unit costs → Exports are more expensive and we sell less. → Trade in Goods and Services is lower. → Current Account is in deficit.

-1 . . . unit elastic

The government sets two prices: Pmax and Pmin If the market price goes above/below these prices, the government intervenes by selling from/adding to the buffer stock.

Differentiated Products: Better Choice for Consumers Lots of choice between firms for consumers

Goods where Quantity Demanded decreases as income increases

-High unemployment means wages fall (workers have low negotiating power; they are fearful of losing their jobs) -Lower wages decreases cost of production for firms. -Lower cost of production means there is no need for firms to increase their prices. -Price stability means no increase in cost of living for workers. -Low cost of living means workers can afford lower wages. (And the cycle continues)

Elastic

The Bank of England