Economic Growth And Economic Factors

Submitted By Jamarr5242
Words: 832
Pages: 4
Open Document
Economic Factors
Factors
Businesses are affected by the economy
An economy describes how a country spends its money
This is determined by 5 factors
Economic
Economic
Growth
Growth
Exchange
Exchange
Rates
Rates

Inflation
Inflation
Economic
Economic
Factors
Factors

Balance
Balanceof
of
Payments
Payments

Unemployment
Unemployment

© Business Studies Online: Slide 1

Economic Growth
Growth
This measures how much extra an economy has produced this year compared to last year
The total amount produced in an economy is called: ross omestic roduct This means the total value of products produced within the UK
© Business Studies Online: Slide 2

The Business Cycle
Cycle

Income

The growth of an economy will vary, but generally increases This is called the Business Cycle, and can be shown as:

Trend is increasing growth
Boom
Recession

Time
© Business Studies Online: Slide 3

Inflation
Inflation
Inflation is a general and sustained increase in prices
In other words its when things get more expensive!

It is measured by looking at the price of a “basket” of goods bought by most people each month
It is quoted as a percentage annual figure
E.g. inflation of 5% means that on average things are 5% more expensive now than they were this time last year

The government will want inflation to be low in order to help businesses.
Can you explain why low inflation helps businesses?

© Business Studies Online: Slide 4

Why is High Inflation Bad?
Bad?
Inflation can cause a number of problems:
People try to save money, and so will spend less. This can create unemployment Higher prices means people are worse off
Costs will be higher, forcing prices up further.
If UK inflation is higher than elsewhere then UK companies will sell fewer goods abroad

© Business Studies Online: Slide 5

Unemployment
Unemployment
Where people who want a job cannot get one
It can occur for a number of reasons:
Frictional
People moving between jobs

Structural
Caused by major changes in the structure of the economy

Cyclical
Caused by changes in the business cycle

Technological
Caused by automation, where machines take the place of workers

Seasonal
Caused due to changes in the seasons, e.g. Alton Towers staff

© Business Studies Online: Slide 6

The Effects of Unemployment
Unemployment
Unemployment can have good and bad effects on businesses: Effects of Unemployment
Good
• More people looking for work • Business has greater choice when recruiting
• Will be able to pay lower wages

ü

Bad
• People have less money to spend
• Demand will fall
• Profits may fall

û
© Business Studies Online: Slide 7

The Balance of Payments
Payments
The balance of payments (BoP) measures the level of international trade that takes place.
It is calculated as:
Balance of
Payments

= Revenue from
Exports

-

Spending on
Imports

Where:
Exports are goods and services made in the UK but sold in foreign countries
Imports are goods and services made in foreign countries but sold in the UK

© Business Studies Online: Slide 8

Deficit or Surplus?
Surplus?
If more money is spent on our exports than we spend on imports then the BoP is in SURPLUS.
Exports > Imports = Surplus

If we spend more money on imports than we receive from exports the BoP is in DEFICIT.
Exports < Imports = Deficit

© Business Studies Online: Slide 9

The Effects of International Trade
Trade
International trade can create
Show More

Related Documents: Economic Growth And Economic Factors

9789812812520 Fmatter Essay

Understanding China's Economy Downloaded from www.worldscientific.com by 24.202.235.236 on 04/13/15. For personal use only. UNDERSTANDING CHINAS ECONOMY Understanding China's Economy Downloaded from www.worldscientific.com by 24.202.235.236 on 04/13/15. For personal use only. This page is intentionally left blank Understanding China's Economy Downloaded from www.worldscientific.com by 24.202.235.236 on 04/13/15. For personal use only. UNDERSTANDING CHINAS ECONOMY Gregory C. Chow Princeton University…

Words 1749 - Pages 7

Pest Analysis (Netherlands) Essay

2 General Facts 3 2. Political Risk Factors 4 2.1 Political Structure Analysis 4 2.2 Key Internal Political Risks 5 2.3 Key External Political Risks 6 3. Economic Risk Factors 7 3.1 The Real Sector 7 3.2 The Public Sector 8 3.3 The Monetary Sector 8 3.4 The External Sector 9 3.5 The Labour Market 10 3.6 Economic Risk Assessment 11 4. Social Risk Factors 13 4.1 Social Spectrum of Netherlands 13 4.2 Key Social Risks 14 5. Technical Risk Factors 16 5.1 Living and Working…

Words 7217 - Pages 29

The Contributions of Reagan Era Policies to the Recession of 2007 Essay

being the paragon of conservative economics. Proponents of Reagan-esque policies offer Reagan’s alleged low unemployment rates, largely growing GDP, and laissez-faire governmental policy as support for the belief that Reagan’s policies were not only akin to today’s conservative economic ideology, but that his policies had beneficial long term effects for the U.S. economy. This essay will not only debunk the aforementioned claims, but explain why Reagan’s economic policies contributed to if not catalyzed…

Words 2307 - Pages 10

English Essay

15/04/2014 Dr Louise Fitzgerald Education Development Unit ECON1101 In-class Test, week 8 The goals of Test 2 Knowledge (ASB Learning Goal) Explain the assumptions of standard models of microeconomics. Explain the different market environments in which individual, social and government decisions are made. Explain the reasons for and outcomes of government intervention in the economy. 1 15/04/2014 The goals of Test 2 Critical thinking and problem solving (ASB Learning…

Words 991 - Pages 4

Develop and Development countries Essay

DEVELOPING COUNTRIES SYDNEY 2014 The word development according to the dictionary means the act or process of development, growth, advancement process. Ater the Second World War, developed countries have become the center of the capitalist economic universe and started selling technology, capital goods and capital to peripheral countries (developing countries where TNCs were installed). These have to export, increasingly, for the core countries to try to repay the mounting debt, while also…

Words 1599 - Pages 7

Essay on Bolivia: Bolivia and Bolivia Country Profile

Royal Roads University | Bolivia | A true underdog story | Derek Bolen 3/6/2013 | Contents Introduction 1 Country Specifics 1 Market position 1 Major Economic Opportunities 2 Banking 3 Government and Cultural Harmonization 4 National Competitive Advantage 5 Barriers to Entry 5 Individual Association 6 Conclusion 6 Bibliography 8 Introduction Bolivia is located in South America and is bordered by Chile, Argentina, Paraguay, Brazil and Peru. The countries…

Words 2713 - Pages 11

ERP Final Report Essay

Executive Summary Enterprise Resource Planning (ERP) system is to combine business activities and information technology. In other words, ERP internal resources integrate such as planning, manufacture, inventory, accounting, distribution, transportation, human resources in order to achieve the most efficient management. In this report, we will discuss about the applications of ERP system in a company and the benefit which the ERP system brings to the company. In particular, the company that our group…

Words 1888 - Pages 8

Notes On Intermediate Accounting

ACCT 4111 Intermediate Accounting I 04:33:29 AM 1 ACCT 4111, Sumer 2015 Dr. Taewoo Park Office : #522 Robinson College of Business (35 Broad Street) Phone : (404) 413-7219 E-mail : tpark11@gsu.edu Office Hour : Mondays and Wednesdays 02:30 - 03:30 PM, and by appointment 04:33:29 AM 2 COURSE DESCRIPTION REQUIRED MATERIAL Spiceland, Sepe and Nelson, Intermediate Accounting, 7th edition PREREQUISITE CLASS FORMAT 04:33:29 AM 3 GRADING Three exams 90 % Attendance and Quizzes 10 % Total…

Words 3581 - Pages 15

Ftse Overview Essay

2012 the nominal prices have been adjusted by the Consumer Price Index1 1500.00 1000.00 500.00 0.00 01/1988 10/1988 07/1989 04/1990 01/1991 10/1991 07/1992 04/1993 01/1994 10/1994 07/1995 04/1996 01/1997 10/1997 07/1998 04/1999 01/2000 10/2000 07/2001 04/2002 01/2003 10/2003 07/2004 04/2005 01/2006 10/2006 07/2007 04/2008 01/2009 10/2009 07/2010 04/2011 01/2012 10/2012 (CPI) (basis 31.01.1988). The real prices better represent the true performance an investor achieved over this period…

Words 650 - Pages 3

How Strong Is China's Economy?

part 1 conclusion part 2 part 3 04/21/15 outline 1 to 2 paragraph Group 6 3 to 8 paragraph return 9 to 11 paragraph 04/21/15 1 to 2 paragraph Chinese economy is so heavy weight that it draws the world’s attention. He points out the potential deficits of Chinese economy, but he also indicates that it is not a current matter. Group 604/21/15 listing some concrete examples 3 to 8 paragraph comparison between China and the Asian tigers 04/21/15 overthrows the view that Chinese…

Words 795 - Pages 4