4.1.1a Growing economies

Question 1

what are the indicators of growth

Answer 1

Gross Domestic Product (GDP) per capita
Literacy
Health
Human Development Index (HDI)

Question 2

what are the five largest economies

Answer 2

USA
china 
japan
Germany
UK

Question 3

how is economic growth measured

Answer 3

consumer spending
business spending

because if business sales increase , this means profits rise, which could increase demand , leads to business expansion , invest more money, employ more people

Question 4

how did America get into the recession

Answer 4

USA banks lent money for subprime mortgages (didn’t have jobs)
sell packs of mortgages
sell debt to other banks as an investment
not sure if they will get subprime mortgage bonds back
banks stopped buying bonds as unsure it will be repaid

causes recession as no bank will stop lending money to everyone

Question 5

reasons for china’s economic growth

Answer 5

• fall in communism
• hong kong handed back to china
• ethics allowed faster growth due to emphasis on helping state rather individualism
• manufacturing based in relatively small areas

but increased global competition

Question 6

how does global growth affect uk businesses

Answer 6

marketing

• more availability of cheaper products
• selling prices dropped because of global competitiveness
• more competitive, uk manufactures differentiate by quality

operations
-offshoring , manufacturing moved to cheaper locations

human resources
-ability to recruit from overseas, with different skills

finances

• new global markets , marketing development
• costs reduces and cheaper
• profits should increase but lower prices so profits might slightly dip

Question 7

Implications of economic growth for individuals and businesses

Answer 7

Allows better access to raw materials
Greater movement of goods and services between countries
Increased opportunities for cheaper production
Greater financial investment opportunities
Opens up new markets
Employment patterns and impact on consumers

Increased profits for businesses

• Trade opportunities will arise in new markets leading to an increase in demand and increased revenue and profit
• The owners of businesses will see an increase in income e.g. through higher share of profits (dividends)
• Businesses can use retained profits to reinvest into productive capacity e.g. new machinery
• Access to growing economies will create business confidence benefiting the UK economy as a whole e.g.
• As economies get wealthier the UK will start to produce even more highly differentiated products to meet global demand. This will lead to changes in employment patterns as businesses will demand highly skilled workers