Existing homeowners. So it's from homeowners, not for consumptions, I mean, not for our customers. No, no, it's for people that already have a house. And now so you already have your house and now the price of the house has gone up. What does that lead to? So. You feel richer, so maybe you have. Firstly there's no relevance with consumption. So so c is delete. I'm sorry you've got the thing on. Sorry I didn't turn it on. Sorry. Okay. So you said not this one, didn't you? It's the simple one. Don't overthink it. How do you feel if your house price goes up? One of this were higher income. Yes. Nothing to do with that. No good. This way, this way. Yeah, yes. Because remember, we talked about economics is a lot about confidence, about how you think you know whether you think you're gonna to keep your job, whether you think you're going to earn more next year. So confidence is a really big thing, consumer confidence or you know confidence in the economy. Calculate the index number for 2015 and 2016. So this is the base number. And you need to work out this number and this number. Index numbers. Just do it like a percentage is my clue to you. I'll take like a percentage. Yeah. Hang on. I'm just working out and. 100 and. 5.5 perfect yethat's what I got and the other one. 100 and other Yeah 113. Point four very good. Very good. Define the term index number. Can you remember what the definition is? No, well, it's just a way of what's the definition. It's a way to comppair different years by taking into account inflation. Okay. So it's a way to take into account it's a way to compare different years, take it into account inflation. So what this is telling you is that if you say you were comparing two houses and you had the price for one in 2:14 and the price for one in 2017, they and you wanted to know which was worth more, you would have to put them both into the same year youhave to take into account of the change in price over the years. So it's a way to compare index numbers up. Awesome. Let's waste her compare things over time. Bye. It's bit better way to compare the price or value of items over time by taking into account inflation using the first number as a base year. Okay. So it's a way you compare the different years as you go through. Can I just say these you see these short questions that we're doing here, this is more likely to come up in the as exam. Are you doing the as level at the end of this year? You know how? You know how like you do your course for two years and then you do an a level at the end. Sometimes some schools at the end of year one, you do an as level. So you sit the half the a level as well as the a level. Do you know or let that being mentioned, it's just the papers are slightly different. That's why I'm asking maybe maybe okay. Well, these short answer questions tend to be on this this paper. That's why I'm asking. That's all not to worry about. But okay, so we're way to compare the price of value items, why it's over time by taking into account first number. Oh, here you go. Find the term gross domestic product. What's gross domestic product? The total productivity in this country very good. Calculate uk's GDP per capita in 2015. You're advised to show your working. What can you watch the jp head? Go ahead. Well I'm assuming you're which country has so much hang on here just for everyone. Oh know that's only 28000 you've only up with 28000 does your answer because you've done million divided by million which goes 28766Yeah so that's that's probably about right. Yeah Yeah Yeah Yeah because GDP per capita is how much money per person the income of the country. So if you think of like the usa, the GDP per capita. You would expect to be about, I don't know, 30000, 40000. You think, think how much people earand, how much they, you know, how productive each person is, that it's very huge, about 40000a person. It's quite big. Which one of the following is most likely to affect an increase in real GDP per capita? Well duty crincrease growth. Oh, hang on, which one? Sorry, I read this wrong. Which one? Following it is the most likely effect of an increase in real GDP? Yeah, Yeah, Yeah, Yeah. Increase in living standards. Yeah define the term recession. Can you remember what a recession is? No. The negative economic growth? Yes, yes, yes. The only bit you missed out there, you're right. Two consecutive quarters. So basically for half a year. Half a year, okay? Because what they do is they measure economic growth in quarters, you know so this is a year, half a year, and then the measures come out each quarter and they've got to be consecutive. So they've got to be one after the other. So say there was negative economic growth in this one. This was negative, and then this one was actually positive, and then this one was negative. It wouldn't be a recession. It would have to be that this was negative and then this was negative. And then because it would be two consecutive quarters, it would be deemed as a recession. Okay. So they've got to be consecutive. Explain one characteristic of a recession. What characteristics have you got on a recession? Lower living standards? Yep, got two Marks though. So how would you expand that? Because the GDP per capita is decreasing good. Just be careful of that one mark, two mark thing that was you know that's the only thing I just say there. Which point of the trade cycle diagram illustates a negative output gap? G. Shor这几个growth。So where's there a negative on actual versus negative b very good negative output gap yet? Real GDP inspeconomies in asitwo thousand blah blah blah. What's this? Which on the following can be inferred from the chart? Oh dear, right? Okay. You might have to keep scrolling up and down. Do you want to do the scrolling up and down? Because we need to look at the chart for this. I don't want to be sort from from the charts. Most Italy and uk. Got France itally in the uk okay the options. Yoursouls are at eight. Yeah right right zero. No. Think I know. It's quite hard. It's quite a lot of numbers and lines and things. You think. Guess my Yep, that was what I got as well. It was quite tricky, wasn't it to go through them all like Yeah the rest of them. I mean, we didn't know anything about inflation that was that was actually wrong. And that one we got to 2014, but we didn't know what happened afterwards. So Yeah, perfect to find the term real GDP. Productivity in the country, which will be influenced by inflation Yeah taking into account inflation, Yeah very good. Illustrate the illustrate a negative output gap. On here I gregate supply. I demand. Might put this one on before you hang on. It's negative. 那。Okay. So it's not a full efficiency. So in this instance. What it wants you to do. Sorry grwhat's me negative sorry that was me shortening negative negative output gap. Negative output gap is where the actual output is less the potential outgood. Okay, so one way you can do that. Yeah, look, got. Well, we make this straight line there. It has to. Be well, you can put it sort of it doesn't have to be exactly where I've put it, but it needs to be it needs to be to the right of the equilibrium because what we're saying is this is where our economy is hit now because it's in equilibrium. Yeah. It's given you the equilibrium. That's where we are now. Okay? That's where we are now. That's where we're operating at the equilibrium. Yeah. So we need to put our long run aggregate supply, our potential anywhere that side of the equilibrium. Yeah, anywhere this side because pugap, because what we're saying, what we're saying is that we're here second W. So what's happening me now? That's where we are now. This is equilibrium is where we are now. Sorry, it's sorry. Sorry. That's what I thought. That's where we are now. The equilibrium, okay? And that's where we're operating. But the negative output gap says is where we're actually operating. Now this Green bit, the actual is less than what we could be. So the pink shows what we could be, our potential output. So as long as you put your line, your long run aggregate supply anywhere further along the output, any you could put it, you know, can you see my pink darting? Okay, you could have put it here. You could have put it here. You could have put it here as long as it's this side of the equilibrium because what you're saying is any of those lines, if that was our potential output, we are operating lower than our potential output. A bit like if you think about it like this, you're drawing this way the way if you were drawing a production possibility frontier, that this is our potential. So I'm actually not I'll do the other way around. You're drawing it that you're saying, well, hang on, this is our potential, which is these lines here, which is these lines. But actually we're currently at here, which is us here now at the equilibrium. So all it's saying is currently where we are is less than where we could be. Does that make any sense? Let me get rid of these lines because I've made it messy. Okay. So you just put a long run aggregate supply on and you say, look, in the long run, our aggregate supply could be here. This is what we as a country could produce. But we are currently at the Green bit because that was already drawn for us that you know somebody else had drawn that we just had to know that that was the current equilibrium. Yeah, actually equilibrium. So if we're at the equilibrium here, but we've drawn this on the long run aggregate supply where we could be, this is the part we're kind of wasting. This is our negative output gap. But you could have drawn that. You could have drawn that further that way or further that way. You couldn't have drawn it here. Because we're actually further than you know we're further a long output than this. So anything this side of the equilibrium would have been wrong. Does that make sense or not? Yeah. Do you want to take a screenshot of that? I'm still not understand. Yeah, I see that it's now so. So why we choose the long run as is there any difference. No, no difference as long as it's not as long as it's not anywhere here because that would be that would be that wouldn't give you a negative output gap. Because if you had it here, yoube less than the equilibrium because the pink one shows what your potential output is. Pink, what we've drawn long run aggregate supply is our potential output. Where we are now is the Green. So this is where we are now. So therefore, this kind of gap between the Green and the pink is our negative. We are lower than expectations. We could be doing better. But you could have drawn it here. This could be our long run aggregate supply. And actually would have an even bigger negative output gap than that was our country. If we were here and our long run aggregate supply was all the way over here, our negative output gap would be even bigger because we are really far below our potential. But if we drew one here, sorry, my ring's really bad. Just pretend that's straight. Can you see we've only got a very small negative output gap? So we were very, if wedrawn the lower run aggregate supply there, we would have a small negative output gap. We would still have one, but webe quite an efficient economy because we would be producing near our potential. So if we were then to draw them on production possibility frontiers, wehave the Green one there, wehave the orange one is really near. The output and then the pink one, now the blue one sorry, the blue one was terrible. You see, he's just operating really inefficiently. And so the smaller the negative output gap, the more efficient the economy is, the nearer its potential it is. Does that help? I've made it messy again. Now let me just get rid of my other bits. So Yeah, this is where we are now. This is equilibrium. Negative output gap is anything where our potential is greater than our equilibrium. So you put the long run outcrocut supply in and you say, look, this is our negative output gap. We could make this much extra stuff. We can withdraw a but why we shouldn't draw it there. You can draw it there. Okay, just a line. So so so which part is the negative? Is the negative out? You draw you draw your line where you want to draw your line and then draw your negative output gap. Draw your line. Draw a long run aggregate supply, draw a line. Whatever. Now it can't be there because that's lower. I'll tell you why that's good. You've done that though because it's lower than the equilibrium. So there's no negative output. Draw another one. Draw another the line. Yes. Good. Right? So your negative output gap, tell me what your negative output gap is. Show it. You've got very small negative output gap view. You've got a very efficient economy. So your negative output gap is the difference between where you are and here. Yeah. I mean, we're just assuming this was straight. So this would be your negative output gap. Y one to whatever we want to call it. Let's call it y two. Yeah, that's your negative output gap. So you're currently at e. Youlike to get to e two, which would make you fully efficient. Yep, that's means yoube operating at full efficiency. But you can't put it here because this would be less than your equilibrium. So yoube saying your potential is less than you currently do, which makes no sense. Is that okay? Yeah so if if in that way, if in that way that is posted in that way, it yay doesn't make any sense because that's saying that your economy is operating higher than its potential. So it would be like me saying, Oh, Jackson, you've got the potential to be able to do you know primary maths and yoube like, well, that's odd because I'm doing a level maths. Like I've done more than what you said. I my potential, like my it doesn't make any sense. It would be, you know, so it's the same within an economy. This is what they're currently doing. So to say their potential is less than what they're currently doing doesn't make any sense. So your negative output gabut, they could in the short term produce more of a make. You know, we talked about short term. Maybe you could actually part is some positive of ouput gap that way. The way you've said the way you've said the other way, this is the negative output gap. And this is the positive output gap. You've got to be very carewith the positive output gap because it could only happen in the short term. They are working at a higher output than potential. Negative output gaps, the one you do most common positive output gap, you could only really, like I say, happen in the short term because it's not something that's sustainable. You can't do it forever. Okay. All right, you're okay with should we go on? Yep. The table below shows GDP per capat perching power parties for a selection of European countries define purchasing power parity or to purchasing power parity. It's a measure of the purchasing power of in each country. We commonly. Say that cut out for a second. Commonly, each country will. Commonly there's a basket of goods and there is different price in each country. So it's more easier to compare the purchasing power in each country. Yeah, Yeah, very good. Very good. The office of national statistics estimates the uk population was 64 million. Using the data, when was what was the uk's total GDP in 2013? Let's go to Oh, okay. Okay. So it says population was 64 million. The GDP per capita is this and then just work out what's the total GDP. You're okay. Look. The office for national statistics says the population so the amount of people was 64 million and use the data what was the total GDP in 2013? So you know it's 64 milyou scroll up and down. Yeah okay. Total GDP three GDP capital and that population GDP per capa time. Let me see that is us dollars. 385O O times 64. First of what? Sounds one's good. Diagrama shows the aggregate demand and agate supply for a country. Illustrate the actual economic growth on diagram a. Aggregate demand actual economic growth on diagram a. So you're going to have to show economic growth. So you're going to have to shift shifter. So you guys to draw a diagram to shift to show economic growth. What Relare you wanting to shift to? There's actually two options. Either is right. Good. And then do you don't ts? How to is that? You don't have to draw both of them. You can just draw one of them showing economic growth. But Yeah, they are your two options. Okay, that's the one. Yeah and then do your dots do. Okay, here on. Sunscrejob happened? That's right. Why two P2? Yep, perfect. Well. Okay, the uk government household consumption as well. The question is of like, Oh, hold on. All the information hold up, discuss the factors that might explain why the uk's forecalong term trend rate was reduced, which uk forecast long term trend rate or growth was reduced. Extract v, lines nine to ten. Where's extract b? Long trend wait, extract b lines nine to ten, okay, in this sentence and max, explain ining why the ufocused long term trend rate of growth also reduced, okay? That b Yeah I see I see the uk focus the long term trade rate of growth was reduced. Some factors. There might be some in here, though. 50Marks okay? We'll reduce the wafare payments extra and introduce the extra spending costs of public sector. And the fall is uk productivity. Okay. So what things basically the question is what things mean that the uk growth is going to go down? Why what sort of things would make the economic growth decrease or. Start to go badly. And there's some some examples there. What one of them can you think of that would mean the uk p, uk growth in the economy is gone down? What happens when this let's start with this one. If you can't think of anything, what happens with spending cuts in the public sector? Spending costs in the public sector means less, less public goods, good, which means, which means less education. Less health care, sir, health care, less defense. Let's public. Domestic difference. What does that mean for sort of aggregate demand? Growth Yeah for aggredemand that will lead to the less government spending. So that will decrease the aggregate demand. Yep, command will go down, which will mean sort of growth rates will go down. Very nice. Yeah, growth rates will go down. What if there's slower growth? What is why the get why would the government get less tax receipt? Why would they get less money coming in? Lower tax. Slower growth maybe means the slower economic growth, so that means less G D P E. And. And this means less consumption. So there's less tax revenue for government. That is why there's low lower tax receipts. Maybe that, that is caused by the extra spending cuts because in that equation, we know that aggregate demand equal to consumption plus investment plus government spending plus net exports. Very good, very good. If the government is. What sort of external factors do you think could lead to low growth rates as well? Things sort of wider think other factors that could lead to low growth rates in an economy all in the uk productivity. So say that again. Sorry the uk productivity here what what x Yeah and what other what could what could cause that I'm thinking things like GDP into the lower economic growth growth. Good. Good. And what could what could cause that to happen? So for example, what if there was like uncertainty politically? Think Donald Trump, think wars, think Covid, think all that sort of stuff that could all lead to, because the question is all about growth rate in the uk. So if there was talk to me about things that could affect growth rate in the uk, that could be external to the uk. So tell me about that, say how would how would like not Donald Trump particularly, but you know like international relations or international events in international countries such as wars et c, how would that affect the uk growth rate? What happened to the uk growth rate in the pandemic? What happens when there's a war? Well, if there is a war, many people attend in the war, and that will decrease the productivity because less labor force, very nice, and it leads to more answers. GDP, very good. Okay, Yeah, that's lap. So lower economic growth. Talk to me about political things. So such as quotas or tariffs, how might that affect economic growth of the uk. Which about quotas or tariffs? If Donald Trump put a load of tariffs on uk goods tariffs well, there if there's tariffs, the exports will decrease. So net exports will will decrease, will decreing as well. So the agdemand will trip to the left. Very good. What about what was your one is going say? What about exchange rates? Does that impact what it does? But tell me how that could impact economic growth. Very similar with exports. What you've said. I said that the net exports the net exports will decrease because there's tariffs. So there's there's less exports. Good. Tell it help how that the it demand will decrease and a good entire one it will shift to the left. Good. And now tell me how exchange rates also do that or could do that. Spiced p stronger pound import, cheaper export area. So if the stronger if there's stronger exchange rate, there's stereexports and cheaper imports. So the net exports will decrease, which leads economic growth. Tell me, keep going, which leawhich makes the economic growth economic growth in in the uk. If you're importing more and not exporting, what happens to economic growth? Less exports if there's less exports then will lead to use less productivity and less GDP because there less exports. Very nice. Yeah. And so so you're 80 shato left over. Yeah. Good. Can you see how they're all linked and how this is just a random question? And we can kind of pull in nearly everything. We can pull in taxes, we can pull in exports, we can pull in exchange rates, we can pull in tariffs. We can pull in obviously, ad which you're very good at. You're getting very good at your your exchange rates. By the way, you're hot on that. Every question think to yourself, can I put exchange rates in here? How does exchange rates impact this? Yeah, because you know that you're solid with that. Okay. So just any exam question, don't just think you've got to remember they're all interlinked, all of these topics and you can say things you know like you said about tariffs and things. You could add evaluation to that. And you could say this would have had an even greater impact if it was also happening in combination with a high exchange rate as high exchange rates, blah, blah, blah, blah, blah. And if you like linked them all in. Do you see what I mean? You know it now it's just about getting it together. Because when when I give you the prompts, what about this? What about that? You do it. You do it perfectly. Yeah just try and sort of think about them all linked together. Does that kind of help that question to sort of link them all together more? Yeah. Yeah, Yeah. That's that's what we need to do. Okay, we'll Carry on. We'll do more. They're happy just going through more of these sort of the macro side. Alright then. Okay, I will see you tomorrow. Have a nice afternoon or evening, whatever you're gonna do alright right? But.