Economic Issues (Copy)
- Business cycle stages
- Gross Domestic Products can increase and fall in different stages of the business
- GDP is all the production that happens within the borders of a business in one year.
- Growth
- Where GDP rises, unemployment falls and better living standards. Better business flourishment
- Boom
- Too much spending and demand
- Price rice to meet the shortage of products
- Skilled workers are in shortage
- Costs rise
- Uncertainty about the future
- Recession
- Too little spending
- GDP falls
- Fall in demand and profits for businesses
- Workers lose jobs
- Slump
- Long-drawn out recession
- Extreme recession
- Very high levels of unemployment
- Prices fall
- Businesses fail to survive mostly
- The government does not want a recession or slump
- How different changes affect business
- Employment levels
- Affect ability to get new workers
- Cheaper alternatives may be bought
- Customers lose their jobs
- Inflation rises
- Business costs increase
- Sales fall
- GDP rises
- Economy grows
- People spend more
- However, employing better workers can start to become difficult.
- Employment levels
- Economic Objectives
- Low inflation
- Inflation reduces real income.
- Goods become expensive so selling abroad can be difficult
- Expansion of businesses can stop
- Low unemployment
- Unemployed people don’t contribute in production
- Unemployment benefits is an added cost for the government
- Economic Growth
- Output increases
- Average living standard improves
- People can afford more
- Balance of payments
- Exports are the products sold to other countries
- Imports are the products purchased from other countries
- If imports higher than exports, balance of payment deficit
- Can cause foreign exchange run out in the long-term
- Exchange rate depreciation can occur
- Government economic policies
- Already covered in economics in detail
- Low inflation