GDP = Economic Environment Flashcards
1
Q
What is gross domestic product
A
The total value of all goods and services produced in an economy in a period of time
2
Q
What happens during a economic boom
A
- increased output = more cash flow, more income = disposable income
- rising employment and wages
3
Q
What happens during economic recession
A
- rising prices (inflation)
- unable to meet demand = balance of payment deficit = buying things from abroad
4
Q
What happens during slowdown & recovery
A
- falling output = less money flowing = less overtime = falling wages and incomes
- less pressure on wages to go up
- prices stabilise/ fall no pressure to match supply to demand = less scarcity
- balance of payment surplus
5
Q
How might investment cause economic growth
A
- increase in profitability
- fall in rates of return on investment (payback time)
6
Q
How might consumption cause economic growth
A
- increase in incomes
- increase in wealth (house prices
- increase in consumer confidence
7
Q
How might government spending cause economic growth
A
- changes to government policy
- change of political party
