6.1 Economic Issues Flashcards
1
Q
Inflation
A
Increase in average price of goods over time
2
Q
Problems with inflation
A
- Real income falls
- More importing as it’s cheaper
- Businesses won’t expand, less jobs, living standards fall
=> Low inflation encourages expansion, making it easier to sell products
3
Q
Economic Growth
A
GDP increases each year
=> higher living standards
4
Q
Problems of falling GDP
A
+ Unemployment
+ Low living standards
+ Businesses can’t expand
5
Q
Growth Stage
A
+ Rising GDP
+ High living standards
+ Unemployment falls
6
Q
Boom Stage
A
+ High GDP
+ Too much spending
+ Prices rise
7
Q
Recession
A
+ GDP falls
+ Less spending
+ Unemployment high
8
Q
Depression
A
+ Long recession
+ Businesses fail
+ High unemployment
9
Q
Monetary Policies
A
+ affects interest rate
+ More interest paid, profit reduced, less money borrowed
10
Q
Fiscal Policies
A
+ Adjustment in government spending & taxation
