The Consequence of Economic Growth

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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
    • 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.
      • 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

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