External Influences- Economic Indicators Flashcards
1
Q
define GDP
A
the total value of output produced in an economy in a year
2
Q
define economic growth
A
the annual percentage change in GDP
3
Q
what can the government do to facilitate economic growth?
A
-encourage investment in physical capital ( subsidies)
-improve infrastructure
-incest in education
4
Q
define inflation?
A
persistent general tendency of prices in the economy to rise
5
Q
what causes inflation/ prices to go up?
A
-demand pull ( less supply, more popular product)
-cost push (higher wages, raw materials more expensive)
6
Q
effects of high inflation?
A
- makes UK exports uncompetitive as products can be made anywhere in the world
- reduces multinational investment because MCNs are looking to produce in the cheapest place possible
- increase uncertainty around profits because they want t security in investment returns
7
Q
define exchange rates
A
the value of one currency in terms of another
