economic developments in affluent society

Question 1

why was there optimism and boom in the aflfuent society? (15)

Answer 1

-food rationing ended in july 1954
-increased burth rates post war,
(1861 51 million poeple in GB/5% up)

-increase in oversease trade= caused higher levels of earnings from exports and investmants=higher employment
((1955 full employment achieved)

-was expansion in electrical and engineering work

-financial/proffesional services to transport sales grew(1960, 5 million employed in industry)

-wages rose

-butler provided ‘give away’ budjet, where middle class tax was cut by £134 mil

-produced 29% more good than in 1951

-consumerism growth

-poeple could buy cars

-stop go economics create large internal consumer demand

-sterling regain value over dollar

-april 1959 provide tax cuts of £370 million

-national income commission

-lower bank rate=more consumer spending

Question 2

what is the “stop-go” economics?

Answer 2

-attempt to control growth of economy when in danger

Procces:
-when imports exceeded exports and balance of payments crisis- causing governmant implimenting controls, making demand fall and decrease outpot

-then governmant removes controls to increase frmand and rise imports

(cycle repeats)

Question 3

what are the consequences of the stop and go policies?

Answer 3

• faileed to encoruage increase in export trade to help bolster export indistries
  =creating problems with balance of payments

Question 4

what are balance if payments?

Answer 4

Difference between invisible imports and exports (shipping, banking and insurance)

Question 5

what is the national income commision?

Answer 5

(1962) kept eye on wages and prices

Question 6

what were the problems the economy and governmant faced? (12)

Answer 6

-1950s fall in traditional occupations (fishing, coal mining and ship building)

-industries production less than germany, france, italy, USA, netherland

-uk shares in workd trade fell by 10%
-increased production caused inflation
-difficult to persuade trade unions to not increase wages

-coal miners felt they earned less than others

-‘stop go’ economic did’nt encourage exporters to increase trade exports
(create balance of payment problem)

-run on pound caused from suez crisis

-‘pay pause’ held down wage inflation ( ask loan from international moneyary fund)

-rejection of EEC application

-hundred of branch lines and thousands of stations axed
=rural areas isolated

imports remained 20% higher than exports that just rose over 10%

Question 7

who was peter thorneycroft?

Answer 7

-conservative mp from 1938, resign ed as chancellor of Exchequer in 1958, then returned to cabinet in 1960

Question 8

how did peter thorneycroft beleive ‘stop go’ system should be stopped?

Answer 8

‘monetarism’ which limited wage increase and cut money supply

Question 9

what were the reason why macmillan ignored thorneycrofts suggestions

Answer 9

-lead to increase unemployment
-increase cutbacks in housing
-want expansionnist economy
-would anger trade unions