3.7.5 - economic change Flashcards

1
Q

what is GDP?

A
  • the measure of added value on products, adding income to the economy
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2
Q

what are 3 examples of causes of GDP growth?

A
  • capital investment
  • technology advancements
  • population growth
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3
Q

how does economic growth impact sales?

A

increases incomes (not inflation) which leads to higher retail sales

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4
Q

how does economic growth impact profits?

A

creates more demand as more sales are boosting profit margins

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5
Q

how does economic growth impact investments?

A

creates more production which leads to capital investment and rising share prices therefore ease of financing

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6
Q

how does economic growth impact employment?

A

more demand means more job opportunities which can lead to skills shortages and impact on costs

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7
Q

what does a weak pound mean for tourists?

A

it makes it more affordable for tourists to visit as their country has more purchasing power so tourists will get more money

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8
Q

what is a free flowing exchange rate?

A

where a country’s currency price is determined by market supply and demand

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9
Q

what are fixed exchange rates?

A

when the government fixes the currency value in relation to other currencies, typically US$

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10
Q

what is exchange rate uncertainty?

A

when exchange rates change daily, causing uncertainty for export + import, due to knock on fluctuations in price from sales/purchases

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11
Q

what 4 things do the government have to do when exporting UK businesses?

A
  • invest in small businesses
  • legislations
  • foreign trade
  • infrastructure
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12
Q

what is government intervention?

A

actions taken by the government to influence the market and regulate economic activity

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13
Q

what is demand - pull inflation?

A

when people want to buy more goods and services than what is available so prices go up to reduce demand

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14
Q

what is cost - push inflation?

A

when overall prices increase due to increases in the cost of wages and raw materials

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15
Q

what is the consumer price index?

A

a measure of the average change in the prices paid by consumers over time

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16
Q

what does free trade do?

A

promotes unrestricted flow of goods and services across borders

17
Q

what does protectionism do?

A

seeks to shield domestic industries from foreign competition by imposing trade barriers

18
Q

what is the fiscal policy?

A

the use of government spending and taxation to influence the economy

19
Q

what is the difference between direct and indirect taxation?

A

direct taxation is imposed on individuals or organisations that have to be paid straight to the government whereas, indirect taxation is imposed on goods and services then the taxes are collected before passed onto government

20
Q

what is the monetary policy?

A

a set of actions to control a nation’s overall money supply and achieve economic growth

21
Q

what is quantitative easing?

A

the introduction of new money into the money supply by a central bank