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GCSE: Economy & Economics

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What are the government's economic objectives?

  1. 1 The government has four main objectives for the economy. These are called macroeconomic objectives. The relative importance of each varies from time to time and they are all interlinked.
  2. 2 Economic growth as measured by an increase in Gross Domestic Product (GDP) which the total value of everything produced in a country. This means that income will be increasing across the country.
  3. 3 Low unemployment means that fewer people are actively seeking employment. It is likely to come at the same time as rising growth. There will always be some unemployment as there will be people between jobs but the government usually likes to minimise it as it is expensive, unpopular and a waste of human resources for the economy.
  4. 4 Low inflation means that prices are only rising slowly. High prices means that goods of the country become less competitive compared to foreign countries and so will lead in the long run to lower growth and more unemployment. Inflation usually increases as growth increases so to achieve both is a difficult balancing act for a government.
  5. 5 Balance of payments equilibrium means that the value of goods and services imported equals the value of goods and services exported. This has become less important as an objective in recent years. Higher growth usually means more imports so the balance of payments also worsens as the economy grows.

What are the government's policies to achieve these objectives?

  1. 1 The government has several weapons it can use to adjust the economy to achieve the best balance of the economic objectives. Some of these are used at any time and some announced in the annual budget.
  2. 2 Interest rates can be increased or reduced to affect the amount of money in the economy. If interest rates are high, it becomes more expensive to borrow money so there will not be as much spent. This is mainly used to reduce inflation. Strictly speaking this is not a government action as the Bank of England decides on the best interest rate in the UK.
  3. 3 If interest rates are reduced, it will increase the amount of money in the economy as it becomes cheaper to borrow and there is less inclination to save money. There should therefore be more investment and spending which should lead to more growth.
  4. 4 The government can change the amount that it taxes and spends. By reducing tax, spending more and borrowing the difference it can increase spending in the economy so stimulating growth. It can increase tax or reduce spending to reduce inflation.
  5. 5 Recently, the Bank of England has tried quantitative easing to increase growth in the economy. This involves increasing the amount of money in circulation, again stimulating spending.

What are the long term policies for growth?

  1. 1 In the long run, the government would like to increase growth without having to use the above measures too much. This involves the use of supply side policies which aim to increase the amount that the economy can produce without setting off inflation.
  2. 2 Policies to increase productivity include privatisation (selling off government owned business so that it can be run competitively), deregulation (making it easier for businesses to compete in certain markets) and stronger competition laws. The aim is that increased competition will force businesses to become more efficient.
  3. 3 Encouraging investment and new businesses should increase growth. The government can give tax breaks for research and development, reduce corporation tax and give encouragement to new businesses.
  4. 4 Making the labour market more competitive should also improve the economy. Measures taken here include reducing the power of trade unions. Improved education and training should also make the workforce more productive.
  5. 5 Tax and spending is used as an incentive for people to work by for instance reducing rates of income tax and reducing welfare payments so people are more inclined to work.

  • Marked by Teachers essays 5
  • Peer Reviewed essays 24
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  1. Marked by a teacher

    Would It Be Economically Beneficial to Britain to Introduce An Obesity Tax?

    5 star(s)

    However the implication seems to be that either people are getting hungrier (eating more) or they're getting lazier (exercising less). It is true that if you do less exercise and eat more calories then you will put on weight, therefore since more people are putting on weight it must mean that they are doing this. However it could also mean that more of the population are eating different unhealthier foods such as microwave burgers or high calorie ready meals, therefore outlining that it may be down to people having less time to cook meals from scratch meaning that convenience comes before health.

    • Word count: 1751
  2. Marked by a teacher

    Econmoic Concepts behind the uk oil industry

    5 star(s)

    Non-sustainable resources, opposite to sustainable resources are ones in which through economic exploitation, will run out. Oil is again an example as through digging for it and using it to power machines, it will run out. Labour is the workforce of an economy. Each worker will have a set of skills which may or may not be as a result of education and training. The value of a worker is called their human capital. Education and training will increase the value of that human capital.

    • Word count: 1403
  3. Marked by a teacher

    Should the welfare state be desirable?

    4 star(s)

    Finally, another reason that would show that the welfare is indeed desirable is that with the presence of a welfare state, the overall health of the population in the country is increased; through the funding of the NHS, a free organization in which all people of the nation can benefit. However, it can also be seen that the welfare state is in fact not desirable, the reasons that some may have this attitude is due to: as a result of the welfare state, there is higher and more taxation for the people and they will have to pay a greater

    • Word count: 1109
  4. Marked by a teacher

    What happened to the income of taxi drivers, and fares paid by consumers in East and West Berlinafter unification, given that living standards are much higher in West than in East Berlin. Assume the market for taxi cabs is competitive.

    4 star(s)

    Perfect competition is a market structure where firms have no power to affect the price of the product. The price they face is determined by the interaction of demand and supply in the whole market. That is what we call 'price mechanism'. There are a lot of transactions between buyers and sellers in the market, individuals pursuing their own self-interest and aim to maximize utility; companies provide goods and services by the aim to make profits, each seeking their own interest. Price mechanism coordinate these transactions and in such a way to make everyone better off. Market price serves as an "invisible hand" guiding resources to their most efficient uses.

    • Word count: 1119
  5. Peer reviewed

    Explain the main features of the behaviour of firms which operate in an oligopolistic market (10)

    5 star(s)

    The common assumption of the theory is that firms in an oligopoly are looking to protect and maintain their market share and that rival firms are unlikely to match another's price increase but may match a price fall. I.e. rival firms within an oligopoly react asymmetrically to a change in the price of another firm. If firm A raises price and others leave their prices constant, then we can expect quite a large substitution effect away from firm A making demand relatively price elastic. Firm A would lose market share and expect to see a fall in its total revenue.

    • Word count: 1480
  6. Goverment spending. How and why the Government spends and how this might affect Tescos.

    Short term money can be raised by buying Treasury bills from the banks which are short term government securities which pay little interest and discounted. If the government wants to pay for long term finances, government bonds will be formed which Is a promise to repay money borrowed after a particular period of time with certain rate of interest. To repay the money back they government will then have to cut back on the money spent, raise taxes or save more money.

    • Word count: 1694
  7. Report on Business Growth

    In 2004, General Motors redirected funds from the development of sedans to development of light trucks and sport-utility vehicles. Soon after this decision, fuel prices increased by 50%, causing GM to start developing hybrid vehicles and introducing the best fuel economy in their vehicles. In 2005, GM promoted sales through a discount to all buyers, to get rid of all 2005 buildup models, before introducing the 2006 models. However, the promotion did not help the company make more profit. General Motors had completely changed its marketing strategy since then. Nowadays all vehicle prices are lowered, but there are very little or none incentives.

    • Word count: 1094
  8. Economic Solutions to the Problems Facing Sudan

    Despite the massive scale of Sudan, only 6.8% of its land is arable, making it just about useless for farming, although this is a tactic many other African nations use to make their share of money. They also have a debt of about $29.7 billion, and although the G8 managed to abolish the debts of the 18 poorest countries (of almost 40 billion dollars) to the World Bank and others they have not yet got round to the almost 30 billion dollars owed by Sudan to the variety of banks. This would be the first step to development in Sudan.

    • Word count: 1415
  9. Should the government increase spending to get out of a recession?

    People on low incomes general have a high marginal propensity to consume, because more of their income is spent on goods and services need to survive5. Whereas the rich can safely have idle money in bank accounts, gathering interest, and still enjoy luxury goods like that new Mercedes Benz. Therefore, the accumulated revenue from taxation can be used to fund the lives of people on low incomes, in true Robin Hood style. However, I sense a problem. The government does not have an infinite supply of money or materials, because as the basic economic problem states "there are finite scarce resources to satisfy infinite wants" 6.

    • Word count: 1747
  10. World Economic Crisis

    and an excess of houses on the market led to a decline in value of houses across the whole country, and an enormous deficit for banks who then were in ownership of millions of devalued properties. The tightening of banks lending across the globe then followed for fear of instability and protectionist policies were then adapted, freezing the global economy. Due to this lack of confidence on the part of the banks, investors and the consumers a rapid decrease in spending across the whole economy [Jarvis, 2009].

    • Word count: 1210
  11. What is the effect of an interest rate cut upon multinational corporations?

    There was no real way that they could actually reclaim this money, as the people would be unable to keep up with their mortgage repayments. This sparked huge losses within this industry, with banks that had lots of money lent to the banks who had issued these mortgages, Northern Rock being a bank with money stored up in this market, lost out when the market collapsed and many banks lost billions of dollars. Share indexes fell, with stock prices tumbling due to the huge losses made by banks, drying up investment from these banks, sparking fears of market recession coming from the downturn caused by the collapse of the sub-prime mortgage market.

    • Word count: 1405
  12. what are the problems of trying to compare living standards

    National income statics are used to compare the living standards of different countries. Apart from the problem of excahnge rate fluctuations overtime between countries being compared, there are a number of other difficulties when making international comparisons. There may be differences not only in the way national income is calculated but also in the reliabilty of the collected data. When comparing living stnadards between or within countries it may be essential to be aware of the population or income earners the main problem that occurs is the lack of people who are willing to take part in the survey or any data that is needed.

    • Word count: 1583
  13. How will Games Workshop fair in the upcoming recession.

    St Albans �36,598 This means that although people will have less money to spend in the recession, they may have enough to spend on warhammer in this area. However I came to the conclusion that the age of people going into the store will have a deep affect on whether the company will survive. Therefore I took a survey of the amount of people who I saw in the shop over a period of an hour on a Saturday, here were the results: This shows that the manager was true when he said the average age was 15-20, I believe

    • Word count: 1727
  14. Congestion Charging

    Because people are in congestion for longer, they will use up more petrol due to the congestion and with current petrol prices being very high, people can lose a lot of money. The external cost involved here is the cost of extra petrol used up because of congestion that would not have been used if there wasn't any congestion. This can also add up over a while. There is also an external cost in terms of lost wages because of the amount of time lost and so this can lead to people being less well off and so spending less in the economy.

    • Word count: 1269
  15. business studies nat dip level 3 unit 4

    Job specification 3. Advertisement 4. Application / CV 5. Applicants are short listed 6. Reference are requested 7. Interview 8. Job to be offered 1. A job description is on an advert stating which tasks and responsibilities the job involves. Businesses such as JD Sports do this to inform the employee and so JD Sports is recruiting the right person. This is the first stage of designing and advert; there are two stages before it's actually advertised. Below is a job description, directly copied of their website. Retail Assistant The John David Group Plc has long been established as the leading UK specialised multiple retailer of fashionable branded and own brand sports and casual wear, principally through the growth of its main retail fascia, JD Sports.

    • Word count: 1026
  16. Free essay

    Did the Competition Commission Tame the supermarket giants?

    The heaviest concentrations of its stores were in south-east England and Scotland. Safeway also operated 184petrol filling stations and has a 50 per cent interest in a joint venture with BP, which operates forecourt food stores in some of BP's petrol stations. It was making a huge loss and was fast losing not only its popularity but also its profit and it needed to merge with a large company to improve its image. The following are the supermarkets that were involved in the bid to take over Safeway: Asda Asda was acquired by the US corporation Wal-Mart in June 1999.

    • Word count: 1009
  17. Taxation Reform in Australia

    $80,001 - $180,000 $18,000 plus 40c for each $1 over $80,000 $180,001 and over $58,000 plus 45c for each $1 over $180,000 From the tables above, a progressive tax system is evident, whereby the higher income earners pay a higher proportionate tax than lower income earners thus achieving vertical equity. An advantage of this is the achievement of a fair system with progressive taxes. This is to allow lower income earners with enough income to purchase necessities such as food and clothing.

    • Word count: 1460
  18. Argentina Economic Analysis

    Salary Divide in Argentina is a woman's wage is 98% of man's. Government's Role in Society In Argentina, free education is provided to students between 6-14. Similarly, the Australian education system is funded by the Federal Government, by monitored by the State. In 2006 the national education budget was $40.44 billion, comprising 5.8% of the GDP. An extensive system of hospitals and clinics in Argentina is run by national and provincial authorities as well as by private organizations. Medical costs are covered by comprehensive array of insurance plans.

    • Word count: 1274
  19. economics oil prices

    This will mean that the non-oil markets will grow and expand. This is a form of economic growth. By putting more resources (land, labour and capital) into the non-oil industries, this will takes some of the resources out of the oil companies, so will lose some jobs in the short run. However, in the long run, a lot more jobs will be created in the new industry. Oil is a necessity. This means that the demand curve is very steep. � � P1 P QD Q1 Q This diagram shows that if an oil supplier raised the price from P to P1 the quantity demanded only fall a small bit compared to that of the price rise.

    • Word count: 1017
  20. What are the important elements of International Trade

    If it doesn't and you have purchased more imports than exports this is called a deficit. When you export more than you import this is called a surplus but even if you export more you still have to have more income. E.g. you could export more but the price of imports could come to more than the income of exports meaning that you would be in deficit. So you must make sure that the income of exports is more than the price of imports. The next point that I will cover is, Visible Trade. Visible trade is trade between countries that can be seen, such as raw materials, basic materials including iron and mineral fuels and

    • Word count: 1713
  21. brief history on political economy in egypt

    To start off, during the Egyptian revolution of 1953, Egypt's relationship with the United States and Britain deteriorated, because Nasser saw that his success in reaching the economic goals he set for Egypt would clash with their interests in the Middle East region. Therefore, Nasser chose to take the Soviet Union as his super power ally. Such economic targets, hoped for by Nasser, and which are to be accomplished through a social economic system, would in turn need the nationalization of the Suez Canal (to secure a high source of income for Egypt), moreover, would require building the High Dam to help with the prospering plans for Egypt's agriculture.

    • Word count: 1625
  22. external influences

    Richer Sounds also offer price beats in their store catalogue. If any customer phones and finds that the same product is sold in any competitor's store or on the web, then Richer Sounds will try and beat any lower price by up to �100 any time up to seven days after purchase. Richer Sound has at least 4 competitors: 1. Argos 2. Dixon's 3. Curry's 4. Comet Competition helps keep prices down The most competitive business will be the most efficient Businesses may be able to reduce costs by using new methods of production e.g.

    • Word count: 1750
  23. Main characteristics of free market economy

    Essentially, the law of "supply and demand" dominates in a free market which explains and predicts the change in price; quantity supplied and demanded of the good in a competitive market. When equilibrium of price is reached the owners will then distribute the products according to the consumer's utility and purchasing power. The essential component in a free market is that price affecting factors such as taxes, population, income, subsidies and any government interventions are avoided. The term "free market" is related with the laissez-faire economic policy, where businesses and firms are left to run on their own without government intervention.

    • Word count: 1979
  24. GCSE Applied Business Strand D Theory

    Most of the local competitors of Asda, which do not include competitors that are also national, do not pose a large threat to Asda, as generally these are smaller stores, which offer less competition to Asda. Asda must take into account all of its competitors and must constantly achieve their aims and objectives, whilst maintaining a competitive price and maintaining the quality of the products and services offered Economic conditions Economic conditions can have an effect on even the most well organised and managed of businesses.

    • Word count: 1316
  25. India's Economy: "Goldilocks tests the Vindaloo"

    Demand has also been inflated by an excessively negligent monetary policy. The Indian government, initially was sluggish in reacting to higher prices, and have fractured this year with a series of administrative and fiscal measures, notably "banning wheat exports and lowering fuel taxes; and the Reserve Bank of India (RBI) has tightened monetary policy." Yet the proposal that Indian inflation is controlled can to be based on three universal economic characteristics, which ultimately can resolve the indecision on whether the Indian economy should or shouldn't tighten its monetary policy.

    • Word count: 1131

Conclusion analysis

Good conclusions usually refer back to the question or title and address it directly - for example by using key words from the title.
How well do you think these conclusions address the title or question? Answering these questions should help you find out.

  1. Do they use key words from the title or question?
  2. Do they answer the question directly?
  3. Can you work out the question or title just by reading the conclusion?
  • "China was able to survive its crisis in communism (after 1976) because it went for economic reforms and not political reforms." To what extent is this accurate?

    "In conclusion, it is plain to see that Deng Xiaoping's introduction of economic reform greatly aided China's progress and alleviated the crisis of communism. No political reform was initiated by him but this was the very reason why communism remained intact in China, whilst it was obliterated elsewhere."

  • Over the years some theories have been said to influence the foreign exchange rates - Discuss each of these theories and critically evaluate their significance.

    "The theories covered above are relevant in explaining systematic patterns of exchange rate behaviour or long-run behaviours such purchasing power parity or the Fisher effect. The value of these theories for predicting exchange rates is limited basically for the propensity of the unexpected to happen. The real world is characterised by unpredictable unexpected events or "shocks" that are referred to as news. Interest rates, prices and incomes are affected by "news" and the same is true for exchange rates. Periods dominated by unexpected events will result in great fluctuations in spot and forward exchange rates. Since exchange rates are financial asset prices that respond quickly to new information, news on prices will have an immediate impact on exchange rates. Periods dominated by news, observe exchange rates varying a great deal relative to prices, such as periods as the 1970's the 1980's and he early 1990's, where many unexpected economic events occurred and consequently oil prices rose and debt problems appeared. In conclusion exchange rates will remain volatile, while world political events remain unpredictable and therefore no theory will be able to explain or predict exchange rate fluctuations with complete accuracy."

  • Discuss the role Singapore can play in helping her ASEAN neighbours develop their economies, and how this can benefit Singapore in the long run.

    "In conclusion, the development of the other ASEAN economies benefits Singapore greatly as it creates endless opportunities and opens up new markets and generates employment that tap on the managerial and administrative expertise of Singapore. Strong regional economic performance is definitely desirable for Singapore as it promises a vibrant economy and prevents our economy from stagnating. It also gives foreign investors greater confidence in Singapore and gives us brighter economic prospects. Singapore will also prosper in helping these economies develop because of the business opportunities that they present."

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