Provide insights into the operation of an economy.
Make me really confused.
Help pay John Key's salary.
Aid in understanding changes in the price level [inflation], real output [GDP], employment, and unemployment.
Predict when the All Blacks will win the next rugby world cup.
A really pumping economy.
Buy more balloons to inflate.
Equilibrium income, employment and output is below the full employment [Yf]
Total consumption spending by consumers.
Total costs of production.
Total appreciating and depreciating exchange rate.
Total investment spending by firms and Government.
Net productivity gains.
Total Government spending.
Net Exports [Exports - Imports]
Consumption spending decreases due to income tax increasing.
The costs of production fall (decrease in wages).
Investment spending decreases due to a lack of business confidence.
The Government has a budget surplus and spends less than it receives in revenue.
An appreciating exchange rate reduces the cost of importing raw materials.
An increase in productivity due to new technology or a better educated workforce.
Net exports fall.
Decrease in indirect taxes such as GST.
Equilibrium income, output, and employment is above the full employment level of income, output, and employment.
The economy is operating at a level of output beyond its long-run capacity.
Firms may produce the required quantity by working longer hours and paying overtime to workers.
Dial 0800 John Key.