Macro Paper 3
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Direct taxes
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tax on person's income and wealth and is paid directly to the government.
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Marginal rate of indirect tax formula
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change in indirect tax / change in income x 100%
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Indirect taxes
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tax on consumption of goods and services and is paid indirectly to the government.
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GDP Deflator Definition
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is a measure of the level of prices of all new, domestically produced, final goods and services in an economy
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GDP Definition
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the value of a country's overall output of goods and services (typically during one fiscal year) at market prices
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GNP Formula
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GNP = nominal GDP + net income from abroad
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GDP Deflator Formula
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Nominal GDP / real GDP x 100
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Paper 3 grade boundaries
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76% or above - 7 64%-75% - 6
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Injections
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Additions of extra spending into the circular flow of income
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Injections formula
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I + G + X
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Leakages
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The movement of money out of the circular flow of income
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Leakages formula
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Imports + Savings + Taxation
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Keynesian Multiplier
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it shows that any increase in the value of injections (or withdrawals) results in an even greater increase (or decrease) in the value of national income.
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Keynesian Multiplier Equation
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1/(1-MPC) or 1/MPW
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Labor Force Definition
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All persons age 16 and over who are either working for pay or actively seeking paid employment.
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Labour force participation rate
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Labour force / adult population x 100
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Underemployment
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where workers are overqualified for their jobs or work fewer hours than they would prefer.
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Problems with unemployment
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1. human factors: lowered self-esteem/increased depression/increased crime rates/loss of skills 2. economic factors: loss of output (actual vs potential GDP)/idle resources/decline in living standards/more government spending wasted on welfare.
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retail prices index
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Measure of inflation; differs from CPI in methodology and coverage.
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Taxable allowance
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the maximum amount that an individual can earn before being liable for tax.
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Core rate of inflation
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The rate of increase of all prices except energy and food.
