economic issues Flashcards
1
Q
growth analysis
A
- increase in national output
- lower unemployment
- better living standards
2
Q
boom analysis
A
- economy has reached peak output
- excessive spending
- businesses unsure about future
- rapid inflation
- low supply of labour
3
Q
recession analysis
A
- decrease in national output
- fall in demand
- increased unemployment
4
Q
slump analysis
A
- long period of recession
- high unemployment
- difficult period for firms
5
Q
changes in employment impact
A
- increased unemployment means easier to employ staff as wider pool candidates
- no need to pay high wages
- workers have increased incomes so can pay for businesses products
6
Q
rapid inflation impact
A
- increased costs of production
- passed on as increased prices
- could see loss of demand
7
Q
increased national output impact
A
- increased incomes as higher production
- people can afford to spend
- reflects increasing demand
8
Q
low inflation impact
A
- rapid inflation will reduce people’s purchasing power
- rising domestic prices means people buy imported products which are cheaper
- fall in demand for local products leads to lower wages, less expansion, less employment and lower living standards
9
Q
low employment impact
A
- unemployed people do not contribute to the output of an economy
- the government must pay unemployment benefits as these people have no incomes
- this leads to lower outputs and decreased living standards
10
Q
economic growth impact
A
- falling output means less employees required so increased unemployment
- this means lower incomes and decreased standards of living
- this means businesses cannot expand
11
Q
balance of payments impact
A
- nation would have to borrow as they have exceeded their limit of spending
- the value of currency will decline meaning less goods and services can be purchased from abroad
12
Q
impact of increased government spending
A
- increased economic growth
- increased output
- increased employment
- increased tax & revenue generated
- increased standard of living
13
Q
increased income taxes impact
A
- increased taxes means lower disposable income so less spending
- lower sales due to lower demand means decreased production
- this leads to unemployment and its consequent effects
14
Q
increased corporate taxes impact
A
- less money available to fund expansion plans
- less money to pay to shareholders as dividends
- employees unable to get a pay rise which affects the motivation of the workforce
15
Q
indirect taxes impact
A
- prices of products increase
- lower demand and sales
- lower production
- employees start demanding more money to afford higher prices
16
Q
import tariffs impact
A
- prices of imports more expensive
- demand for locally produced goods increases
- if businesses import raw materials they will face increased costs of production
- this will lead to increased prices
- other countries may also start to introduce these tariffs
17
Q
import quota impact
A
- protect competition from foreign countries
- protect employment
18
Q
interest rates impact
A
- reduced profits for businesses that have taken out bank loans
- owners delay expansion plans because cost of borrowing capital for expansion has increased
- fewer entrepreneurs would start new businesses as the capital for this is now more expensive to acquire
- fall in demand as fewer customers borrow money to spend on goods and services
- increase in demand for currency as foreigners can earn money from depositing
19
Q
currency appreciation/depreciation impact
A
- prices of domestic products higher/lower than foreign products
- demand falls/rises from both local and foreign customers
- businesses that import raw material will see decreased/increased costs of production