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Investments, Rates and Imports

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Introduction

A Level Economics Investments, Rates and Imports Define: Investment, Real GDP, Aggregate Demand and the Bank of England 1. An investment is a purchase involving goods that have an effect over a period of time. The investment is made on certain good or company. In the long term this results in future production and profit for the investor. E.g. I may invest in a large supply of ingredients for a recipe used in a pie business. The goods bought in the investment will be used to make the pies which would then be sold at my shop. Real GDP is the gross domestic product that accounts for any recent changes in price levels of goods in the country. ...read more.

Middle

It controls the issuing of bank notes in England and Wales. Discuss a decline in GDP and the effect it has on unemployment 1. A decline in GDP rates usually results in unemployment. This is because the economy is not doing as well as it should have done. When the economic activity in a country decreases because of GDP it usually means that money has been lost in the economy. With less GDP, government spending will decrease, companies like the NHS who rely largely on the high government spending will suffer and will have to cut more jobs as the GDP is less and the government have less money to spend. There is a common link between unemployment rates and GDP decrease, it is known as Okun?s law. ...read more.

Conclusion

E.g. the UK would have to pay for the transportation costs of fruits on a plane and oil on a ship if they were purchasing these items. If these costs go up and the UK cannot afford them, the UK would either have to seek an offer from another supplier, produce its own goods of that sort, borrow money off another country or stop that import to the country. 3. Necessity; if a good is highly sought after it will be highly imported e.g. the English population eats many bananas therefore it is imported and a basic necessity to the UK?s population. However if banana?s decreased in demand which could be down to a number of reasons e.g. a pandemic of ecoli that could affect banana?s; because of the health risk, the demand for banana?s in the UK will decrease dramatically and therefore imports would decrease. ...read more.

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