Impact On Economic Growth

Question 1

What is the impact on costs for consumers?

Answer 1

• those in low and fixed incomes might feel worse off it there is high inflation and inequality could increase
• perhaps high demand inflation, due to high levels of consumer spending
• face more shoe leather costs meaning having to spend more time and efforts as prices are rising

Question 2

What is the impact on costs for firms ?

Answer 2

• firms could face more menu cost as a result of inflation, would have to change prices to meet inflation

Question 3

What is the impact on costs for the government?

Answer 3

• might increase spending on healthcare if the consumption of de-merit good increase

Question 4

What is the impact on costs for current and future living standards?

Answer 4

• high levels of growth could lead to damage to the environment in the long run -> due to negative externalities from the consumption and production of goods and services

Question 5

What is the impact on benefits for consumers?

Answer 5

• the average consumer income increases as more people are in employment and wage increase
• consumer confidence, leads to more consumption and higher living standards

Question 6

What is the impact on benefits for firms?

Answer 6

• firms could make more profits leading to increase of investment
• high levels of investment, develops new tech increasing productivity and lower costs in the long run

Question 7

What is the impact on benefits in the government?

Answer 7

• the budget might improve, since fewer people require welfare payments

Question 8

What is the impact on benefits on current and future living standards?

Answer 8

• consumers income increases
• higher averages mean consumers can enjoy more goods and of higher quality
• public services improve, since governments have higher tax revenues can afford to spend on improving services