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Transcript of Macroeconomics
Managing the economy
Taxation, who decides?
Government Spending (Budget)
Total of Tax Reciepts ~£600bn
Governement Spending 2012/2013
Social Protection -£207 billion
Education – £91 billion
Health - 130 billion
Debt interest – £46 billion
Defence – £39 billion
Public order and safety – £32 billion
Personal social services – £33 billion
Transport – £22 billion
Housing and environment – £21 billion
Industry, agriculture and employment – £19 billion
Other – £43 billion
Funding the deficit
Bank of England
Bank Of England
Issues country’s bank notes
Holds the accounts of the government, banks and industrial companies
Carries out monetary policy
Promotes efficiency and competitiveness of financial markets
Ensures the overall stability of the financial system
High Interest Rates: taking money out of the economy
Low Interest Rates: encouraging spending
Base rate at the moment is 0.5% to combat recession. The base rate is the rate at which the Bank of England lends to other financial institutions and is set by the Monetary Policy Committee in response to economic conditions.
The Base rate is set by the Bank of England and can alter quite regularly. The Bank of England's Monetary Policy Committee meets monthly, they announce any changes to the rate. This is then the standard base interest rate used for most financial products including UK Mortgages. Mortgage lenders have their own interest rate which they charge for lending money, this interest rate is then added onto the Standard Base Rate. Any change in the standard base rate will affect almost every mortgage and loan and how much each loan is affected depends on the product taken out by the borrower.
Inflation is a rise in the general level of prices of goods and services in an economy over a period of time
Aiming to increase money flowing around an economy when interest rates can’t be cut any further
Bank of England buys assets in exchange for money. For example buying government debt.
It simply increases the size of banks’ accounts at the central banks.
Let's come back on GDP again
Historical Inflation in UK
The Argentina crisis
Argentina's many years of military dictatorship (1976-1983): the country went into debt for never-finished projects.
During the last week of 2001, the Rodriguez Saá government defaulted on the larger part of the public debt, totalling US$132 billion. The amount approximately represented one seventh of all the money borrowed by the Third World.
Early August 2013
Is Greece the new Argentina?
What’s USA’s GDP in USD? What’s the size of the U.S. Total Outstanding Debt in USD? What’s U.S. Total Outstanding debt in percentage of its GDP?
GDP usa = $15.68 trillion
Debt Ceiling = $16.7 trillion
What’s the USA Debt Ceiling?
Is there any VAT in USA ?
There is no federal value-added tax (VAT) on goods or services. Instead, sales tax is common in most US states
What’s the World’s GDP in USD, what’s USA’s GDP percentage out of the world’s one? Same Question with UK GDP ?
GWP = 71.67 trillion USD (2012)
GDP (usa) = ~ 22% of the GWP
GDP uk = $2.44 trillion ~ 3.4% of the GWP
What was the world’s GDP in 1900? By how much (in percentage) GDP has grown between 1900 and today?
$1.1 trillion (1900) in 1990 USD dollars
$71,830 trillion (in 2012 U.S. dollars); est. in 1990 intl. dollars: 44,944 trillion