The economic cycle - unit 1
- Created by: Anya kelly
- Created on: 18-05-13 14:30
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- Economic Growth
- measured by GDP (gross domestic product)
- GDP is the amount of goods and services in the economy
- caused of economic growth
- more investment
- improved training, machinery, productivity
- anything that increases the output of goods or services
- drawbacks of economic growth
- increased production = increased pollution
- exhaustion of resorces
- benefits only effect the rich - poor stay poor
- benefits of economic growth
- increase in general income
- more jobs
- increased output
- consumers have more choice
- higher standards of living
- measured by GDP (gross domestic product)
- THE ECONOMIC CYCLE
- Economic Growth
- measured by GDP (gross domestic product)
- GDP is the amount of goods and services in the economy
- caused of economic growth
- more investment
- improved training, machinery, productivity
- anything that increases the output of goods or services
- drawbacks of economic growth
- increased production = increased pollution
- exhaustion of resorces
- benefits only effect the rich - poor stay poor
- benefits of economic growth
- increase in general income
- more jobs
- increased output
- consumers have more choice
- higher standards of living
- measured by GDP (gross domestic product)
- Slump
- a period of decrease in economic growth
- consumers lose confidence
- spending decreases
- investment decreases
- demand decreases
- inflation occurs
- a period of decrease in economic growth
- Recession
- a sustained fall in GDP over two consecutive quarters
- high unemployment
- low disposable incomes
- high gov spending
- low retail sales
- Recovery
- increase in consumer confidence
- disposable incomes start to rise
- demand increases
- Boom
- low unemployment
- high disposable income
- Inflation
- high output
- low gov spending
- What is done?
- curbing the boom:
- increase interest rates
- increase taxes and cut gov spending
- curbing the recession
- reduce interest rates
- cut taxes and increase gov spending
- quantitative easing: printing additional money
- economic objectives
- inflation should be low/stable - at 2% pa
- exchange rates should be stable
- why does recession occur?
- rising costs slow investments + spending
- rising interest rates deter spending
- inflation = falling real incomes
- curbing the boom:
- Economic Growth
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