The Consequence of Economic Growth
- Created by: Jack Cohen
- Created on: 17-04-14 13:30
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- The Consequence of Economic Growth
- SR
- SRAS
- INFLATION - Increase Costs = Increase Business prices to Maintain profit
- Unemployment & Employment - Decrease Real GDP = Less Production = Decrease Emp + Increase Unemp
- SRAD
- SRAS
- Economic Growth & Balance of Payments
- Current Account
- Trade Balance (Goods & Services)
- Inflow & outlfow of money (Imports & Exports) from trade in goods + Services
- Income Section
- Incomes - Derived from invested capital that appears in the capital account. (Dividends & FDI)
- Transfers
- Gov. Transfers = Contributions to EU.
- Trade Balance (Goods & Services)
- Capital Account
- Measures all short term + Long term monetary transactions between UK & rest of world.
- Directs Investments (FDI)
- Portfolio Investment (EG: Stocks + Shares)
- Other Investment (Hot Money)
- Banking flows seeking high short term returns. Includes Net Gov. Borrowing from Foreigner.
- Impact of Real GDP
- Consumer-led Growth
- Increase GDP because Consumer expenditure increasing.
- BOP - Consumers spend moreon Imports = Increase Deficit.
- Export-Led Growth
- Increase GDP because Increase Sales UK Goods abroad = Increase Surplus or Increase Deficit.
- Supply-Side
- Increase GDP because Increase productive Capacity + Efficiency of domestic industries = Increase International Competitveness = Increase Exports & Decrease Imports
- Role of FDI
- Increase GDP because Increase Investment by foreign firms in domestic market = Decrease Imports & Increase Exports
- Consumer-led Growth
- Current Account
- SR
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