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15 Cards in this Set
- Front
- Back
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Define Economic Growth |
Changes in National Output over a period of time |
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What can cause fluctuations in Economic Growth? |
Demand and supply side-shocks |
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What happens if one of the UK's trading partners goes into a recession? |
Significantly decreases the demand fro British exports. This will reduce the output of the economy and result in unemployment. With less disposable income, AD also falls, concluding a recession. |
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Output gap |
The difference between the level of actual output and trend output |
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How do you show short-run economic growth created by a demand side-shock? |
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How do you show short-run growth created by a supply-side shock? |
Opposite |
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How does Long-run growth occur? |
Comes about as a result of supply-side factors that increase the potential for economic growth. This could be a cheaper price of imperative raw materials, or through an increase in the quantity or quality of factors of production- i.e. education serving to make workers more efficient. |
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What could cause a shift in the SRAS? |
Increases in productivity A fall in production costs. |
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What could economic growth be catalyzed by? |
PRIDI
Population increase Raising agricultural output Innovation Dynamic efficiency improved Investment on machinery |
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Benefits to economic growth |
UBITI Unemployment decrease Balance of payments improves* Investment increases Tax revenue increases Increased wages |
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Costs to economic growth |
FISIDE Finite resources used up Inflation Stress increase Income inequalities Deficit in BOP- as an economy becomes more economically developed, it moves away from the manufacturing industries and thus exports less Environment damaged and Externalities created |
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Levels of economic growth for the UK since 2000 |
2000-2008 steady, continuous growth of around 0.75% on average 2008- 2012- Inconsistent growth with ups and downs (Recession) 2012-2014 Slow recovery, around 0.5% |
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What has the rate of inflation been like for the last 16 years? |
Steady, at around 2%. Peaked in 2008 and 2010 with 5% Currently 0.2% (as of December 2015) |
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Unemployment in the UK for the last 16 years? |
Low between 2000 and 2008, between 1.4 and 1.7 million. Rose sharply in 2008 and has not fallen down to a level below that yet (1.69 million as of Feb 2016, according to the ONS) |
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BOP between 2000 and 2016? |
Deficit, however has got gradually worse. Ballooned to 7% of the UK's GDP in March 2016. Why? The demise of the UK's steel industry has not helped, with production falling by 7 million tonnes since 2000 (according to the ISSB). Recently, the UK's biggest steel Manufacturer Tata Steel (a company that was a state-owned monopoly in 1988) announced it would be selling its UK business, losing 15,000 jobs; creating structural unemployment. |
