The impact of economic growth 2.5.4

Question 1

impact of economic growth on consumers

Answer 1

• high demand. as people will have more money and so are able to afford and but properties, which will increase house prices. the rising prices in housing and shares will increase wealth and lead to a positive wealth effect
  -However this can lead to increased inequalities and so may not have any effect on the average consumer and may lead to inflation

Question 2

impact of economic growth on Firms

Answer 2

Investments will increase. More money and more incentive to improve their business.
there will be an increase in their profit as more people will but them as the prices are cheaper.
However firms who sell inferior goods with negative income elasticities may lose out. changing tech and globalisation also mean that firms finding their market disappearing such as DVD rental stores.

Question 3

impact of economic growth on Government

Answer 3

Tax revenue will increase as more goods and services are being bought, more income is being is earnt and more profits are being made. this means that government has more money so an increase in GS and there would be injections.
it can reduce budget deficit
However, economic growth means that they people ted to expects more from the government.

Question 4

impact of economic growth on the current future living standards.

Answer 4

Economic growth will result in lower poverty levels and higher production of goods and services. this will increase jobs so there would be less unemployment and less people on benefits.
However there could be a decreased future living standard due to exploitation of the environment. A rise in income means people have access to electricity and use it more freely causing a depletion of non renewable resources.
But this can be argues that people with higher income are able to buy cleaner fuels and richer countries can devote resources for research and development.