2.5.4: The Impact Of Economic Growth

Question 1

What are positive impacts of economic growth for consumers?

Answer 1

-Positive wealth effect- increase in demand for housing, increase in house prices, growing shares and businesses.
-Productive efficiency- lower prices, higher quality of goods.

Question 2

What are positive impacts of economic growth for firms?

Answer 2

-Confidence- gives firms an incentive to increase investment.
-Higher profits- due to high demand and low costs.

Question 3

What are positive impacts of economic growth for the government?

Answer 3

-Tax revenue- increases, can be used to increase living standards (e.g. better quality healthcare).
-Budget surplus- money that can be saved for future recessions.

Question 4

What are positive impacts of economic growth for current and future living standards?

Answer 4

-Technological advancement- producing goods in an eco-friendly manner.
-Public services- is invested in more, increasing life expectancy and education levels.
-Higher national income- to buy goods & services of a higher quality.

Question 5

What are negative impacts of economic growth for consumers?

Answer 5

-Increased inequality- growth may have little effect on the average consumer, leading to inequalities.

Question 6

What are negative impacts of economic growth for firms?

Answer 6

-Disappearing markets- due to changing technologies and globalisation (e.g. DVD retail stores).

Question 7

What are negative impacts of economic growth for the government?

Answer 7

-Expectations- for better quality services and increased funding.

Question 8

What are negative impacts of economic growth for current and future living standards?

Answer 8

-Negative externalities- environmental damage.