1C - The UK Economy

Question 1

Which industries were nationalised in the UK after WWII?

Answer 1

The coal industry, railways, steel, and electricity industries.

Question 2

What was the main focus of the Welfare State established after WWII in the UK?

Answer 2

To protect citizens “from the cradle to the grave,” providing social security for all.

Question 3

What major economic shift occurred in the UK during the 1980s?

Answer 3

A move toward free market policies and privatization of nationalized industries.

Question 4

What was the largest component of UK government spending in 2022/23?

Answer 4

Social Protection (29.9%), which includes unemployment benefits, pensions, and other social welfare programs.

Question 5

What are some controversies surrounding the UK’s shift to a market-based economy?

Answer 5

Issues include regulating privatised industries, labour vulnerability, directors pay, tax avoidance, and immigration impacts.

Question 6

Why is the ageing population a significant issue for the UK economy?

Answer 6

It will lead to increased spending on pensions, healthcare, and social care, potentially requiring higher retirement ages and policy changes.

Question 7

What is one major issue related to multinational companies and the UK tax system?

Answer 7

The use of tax havens and tax avoidance schemes to reduce tax payments in the UK.

Question 8

How did Brexit affect the UK economy?

Answer 8

It led to increased costs for goods imported from the EU and contributed to inflation, along with uncertainty about trade and regulatory changes.

Question 9

What was the UK government’s response to the economic impact of the pandemic?

Answer 9

The government introduced a furlough scheme, paying 80% of workers’ wages, which cost at least £70 billion, and provided loans and grants to businesses.

Question 10

What was the impact of the furlough scheme?

Answer 10

It helped avoid mass unemployment and business closures but significantly increased government debt.

Question 11

How did the conflict in Ukraine affect UK energy prices?

Answer 11

The average UK energy bill rose to £3,549 in 2022, triggering a cost-of-living crisis for households and firms.

Question 12

What were the combined effects of Brexit, the pandemic, and the Ukraine conflict on the UK economy?

Answer 12

These events led to higher inflation, a cost-of-living crisis, and a significant increase in government debt due to economic support measures.

Question 13

What does GDP stand for and what does it measure?

Answer 13

Gross Domestic Product - measures the total value of all the goods and services produced in a country over a certain period of time. It helps to understand how big or small an economy is.

This of it like a business turnover.

Question 14

Why is economic growth important?

Answer 14

Economic growth shows how much a country’s economy is expanding. It means more jobs, higher incomes, and a better standard of living for people.

Question 15

What is inflation and why does it matter?

Answer 15

Inflation is the rate at which prices for goods and services rise over time. If inflation is too high, money doesn’t go as far, making things more expensive for everyone.

Question 16

How do interest rates affect people and the economy?

Answer 16

Interest rates are set by the central bank to control inflation. Higher interest rates make borrowing money more expensive but help lower inflation. Lower interest rates make borrowing cheaper but can increase inflation.

Question 17

What does unemployment represent in an economy?

Answer 17

Unemployment measures how many people who are able to work can’t find jobs. High unemployment can mean the economy isn’t doing well, while low unemployment usually indicates a healthy economy.

Question 18

What is the trade deficit, and why does it happen?

Answer 18

A trade deficit occurs when a country imports more goods than it exports. This means it is buying more from other countries than it is selling, which can lead to economic imbalances.

Question 19

What is the role of government expenditure in an economy?

Answer 19

Government expenditure is the money the government spends on things like healthcare, education, and infrastructure. It plays a key role in supporting the economy, especially during tough times like recessions.

Question 20

Why do budget deficits and government debt matter?

Answer 20

A budget deficit happens when a government spends more than it earns in taxes. Over time, this adds to the government’s debt, which can affect how much it can spend in the future and may require tax increases or spending cuts.

Question 21

How does international trade affect a country’s economy?

Answer 21

International trade allows countries to buy and sell goods and services with each other. It helps countries get products they can’t make themselves and sell things they are good at producing, boosting economic growth.

Question 22

What is a budget deficit?

Answer 22

A budget deficit happens when the government spends more money than it collects in taxes, causing it to borrow money to cover the gap.

Question 23

What is austerity?

Answer 23

Austerity is when the government cuts its spending and raises taxes to reduce its budget deficit and national debt.

Question 24

How did the government respond to the credit crisis of 2007-09?

Answer 24

The government had to cut spending and raise taxes to reduce the large budget deficit that resulted from the financial crisis.

Question 25

What kinds of spending cuts did the UK government make during the austerity period following the credit crisis of 2007-09?

Answer 25

The government reduced funding for public services, froze wages for public workers, and cut benefits like welfare payments, while protecting some areas like health and pensions.

Question 26

Why did the government increase the retirement age during austerity?

Answer 26

Raising the retirement age means people work longer before they start receiving pensions, saving the government money in the long term.

Question 27

How did the conflict in Ukraine affect government spending?

Answer 27

The conflict caused energy prices to rise, and the government had to step in to help households and businesses by reducing their energy bills, which increased government spending.

Question 28

What is the government’s share of GDP?

Answer 28

It’s the portion of the country’s total economic output (GDP) that the government spends on things like healthcare, education, and infrastructure.

Question 29

Why is it important to control the government’s debt?

Answer 29

igh debt can limit the government’s ability to spend in the future and might require tax increases or spending cuts to pay back what it owes.

Question 30

Q: What is a social enterprise?

Answer 30

A social enterprise is an organisation that has social or environmental aims alongside a requirement for financial viability. It can be profit or non-profit and typically focuses on the “triple bottom line” – social, environmental, and financial benefits.

Question 31

What is meant by the “triple bottom line” in social enterprises?

Answer 31

The “triple bottom line” refers to the focus on social, environmental, and financial benefits in a social enterprise, where all three are considered equally important.

Question 32

Who typically owns social enterprises?

Answer 32

Social enterprises are often owned by employees or members of a particular community.

Question 33

Give examples of social enterprises in the UK.

Answer 33

Examples include The Co-operative Group, the John Lewis Partnership, Cafedirect, and the Eden Project in Cornwall.

Question 34

What are some common goals of social enterprises?

Answer 34

Common goals include paying fair prices to producers, reducing environmental impact, job creation, especially for disadvantaged groups, and providing local community-based goods or services.

Question 35

What percentage of small and medium-sized enterprises (SMEs) in the UK could be considered social enterprises?

Answer 35

Around 7% of SMEs could be considered social enterprises, with higher proportions in sectors like health (24%), arts and entertainment (20%), and education (15%).

Question 36

What is notable about leadership in social enterprises?

Answer 36

Social enterprises tend to have more diverse leadership, with about a third having directors from minority ethnic backgrounds and 47% being women-led.

Question 37

What defines a charity in the UK?

Answer 37

A charity is a voluntary, non-profit organisation set up to promote the public good or help those in need, often focusing on areas such as poverty relief, health, education, and animal welfare.

Question 38

How do charities primarily fund their activities?

Answer 38

Charities are mainly funded through voluntary donations and legacies.

Question 39

What are some key sectors supported by charitable giving in the UK?

Answer 39

Key sectors include medical research, animal welfare, religion, and responses to global disasters.