3.1.5 Positive and negative contribution to the economy

Question 1

What are four positive contributions LSOs make to the economy?

Answer 1

Employment, infastructure development, research and development, exports

Question 2

What are four negative contributions LSOs make to the economy?

Answer 2

Downsizing, imports, outsourcing, enviroment

Question 3

Employment

Answer 3

Results in a high standard of living

Contributes to Australia’s GDP because in times of high employment people spend money on goods and services

Question 4

Infrastructure development

Answer 4

The community benefits from infrastructure built by LSO’s e.g. freeways and reduce travel times can result in greater productivity for employees

Question 5

Research and development

Answer 5

Businesses invest heavily in research and development in order to be innovative and remain competitive. The community benefits from these products e.g. Melbourne university invented the bionic ear

Question 6

Exports

Answer 6

LSO’s export their goods overseas which leads to a favourable balance of payments which is a record of Australia’s trade and financial transactions with the rest of the world

Question 7

Downsizing

Answer 7

Results in unemployment which can reduce the standard of living. In times of high unemployment, people are conservative with spending which reduces GDP. It also can encourage dependency on government welfare

Question 8

Imports

Answer 8

LSO’s may find it cheaper to import products which does not contribute to a favourable balance of payments

Question 9

Outsourcing

Answer 9

When LSO’s outsource overseas (e.g. the manufacturing of their product) they are contributing to a foreign economy at the expense of Australia’s. e.g. contributing positively to another countries employment

Question 10

Enviroment

Answer 10

Pollution, contributions to climate change
The 2006 Stern Review concluded that if nothing is done about climate change, GDP will be reduced by 20%. (only 1% GDP needs to be invested to prevent this)