【正文】 ng light was Milton Friedman believed that if governments simply left the economy alone and instructed the central bank to control the money supply, inflation would be banished, entrepreneurial activity would thrive, economic growth would take off and unemployment would disappear. 4. Supplyside economics, a branch of economics that focuses on stimulating aggregate supply through policies thatinvolve minimal government intervention. 5. Neoliberalism was a politicaleconomic philosophy beginning in the 1970s and increasingly prominent since 1980 , that deemphasizes or rejects positive government intervention in the economy, focusing instead on achieving progress and even social justice by encouraging freemarket methods and fewer restrictions on business operations ... Question 1 Why is there a need for governments to intervene in their economies? Question 2 How does a government redistribute its revenue? Question 3 What types of policies would a government be expected to implement in times of unemployment? Question 4 Analyze the characteristics of a country’s budget. Objectives and Instruments of Macroeconomics ―In general, economists judge macroeconomic performance by looking at a few key variablesthe most important being GDP, the unemployment rate, and inflation.‖ Economics by Paul Samuelson GDP The most prehensive measure of the total output in an economy is GDP, the market value of all final goods and services produced in a country during a year. Movements in real GDP (calculated in constant prices) are the best widely available measure of the level and growth of output. An advanced economy exhibits a steady longterm growth in real GDP and an improvement in living standards。 this process is known as economic growth. High Employment, Low Unemployment ―The unemployment rate tends to reflect the state of the business cycle: When output is falling, the demand for labor falls and the unemployment rate rises.‖ Economics by Paul Samuelson Stable Prices The most mon measure of the overall price level is CPI, which measure the cost of a fixed basket goods 9ncluding such as food, shelter, clothing, and medical care) bought by the average urban consumer. We cal changes in the level of prices the rate of inflation. A deflation occurs when prices decline while a hyperinflation denotes a rise in the price level of a thousand or a million percent a year. 2. Tools of Macroeconomic Policy A policy instrument is an economic variable under the control of government that can affect one or more of the macroeconomic goals. There are two major instruments of macroeconomic policy: fiscal policy and moary policy. Fiscal Policy It denotes the use of taxes and government expenditures. Government expenditures e in two distinct forms: government purchases (including spending on goods and services and government transfer payment) and taxation. Government expenditures determine the public consumption and affect the overall level of spending in the economy and thereby influence the level of GDP Taxation affects the overall economy in two ways. Firstly taxes affect people’s ine by leaving households more or less dispensable ine. In addition, taxes affect the prices of goods and factors of production and thereby influence incentives and behaviors. Moary Policy Moary policy is conducted through the management of a nations money, credit, and banking system. By changing the money supply, the government can regulate the amount of money available to the economy. Restricting money supply leads to higher interest rate, and reduced investment, which, in turn, cause a decline in GDP and lower inflation. Supplementary Knowledge: There are four levels of economic integration in the world, given below in the order from least to most integrative: 1) Free trade area 自由貿(mào)易區(qū) 2) Customs union 關(guān)稅同盟 3) Common market 共同市場(chǎng) 4) Economic union 經(jīng)濟(jì)同盟 Types of integration Free Movement of goods and services Same external trade policies Free movement of factors of production Same domestic policies Free trade area yes no no no Customs union yes yes no No Common market Yes yes yes no Economic union yes yes yes yes Supplementary Knowledge: Main regional economic integration ASEN: Association of Southeast Asian Nations (1967) EU: European Union (1993) NAFTA: North American Free Trade Agreement (1994) lesson 6 Tax and Taxation Leadingin Activities: do tax and taxation refer to respectively? A tax is an involuntary fee paid by individuals or businesses to a state, or to functional equivalents of a state. Taxation refers to the imposition of taxes. 2. What’s the main functions of taxation? a. revenue for public expenditures。 b. a means to achieve social objectives, such as redistribution of ine。 c. a disincentive against certain behaviors. wealth tax: 財(cái)產(chǎn)稅 property tax, capital transfer taxes and capital gains taxes are sometimes referred to as wealth taxes. value added tax: 增值稅 a form of tax paid on products and services at each stage of production or distribution, based on the value added at that stage and included in the cost to the ultimate customer. capital gains tax: 財(cái)產(chǎn)收益稅 taxes placed on profits from the sale of investments or real estate. capital levy: 資產(chǎn)稅 a tax on capital rather than ine, and is collected once rather than annually. corporate ine tax:企業(yè)所得稅 a tax based on the ine, or profit, received by a corporation. business tax:營(yíng)業(yè)稅 A tax levied at the point of sale and based on the retail price of a good or service. consumption tax:消費(fèi)稅 Taxes levied on the consu