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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. Is the Welfare State Desirable?

    These desires fundamentally led to both his and Duncan's downfall. It is also very evident that his ambitions would lead him to do awful crimes and acts of terror which he would never contemplate before. "The Prince of Cumberland a step on which I must fall down or else o'erleap" clearly shows how his ambition had taken control of him and how far he was willing to kill and murder The Prince of Cumberland as before he says "whose murder is yet fantastical", indicating no intentions of murder.

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  2. GCSE Economics Coursework

    This will mean that there should be an adverse affect on the cash flow of any business. Also another reason of the recent rises in interest rates could be due to the trade cycle. The trade cycle is made up of 4 parts recovery, boom, recession, and slump. At this point, we are currently in a recovery, this means that inflation is rising due to increased demand, to try and curb the increasing supply the Monetary Policy Committee are increasing Interest rates, this will increase savings as there are more rewards, and decrease things such as house loans as they become too expensive.

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  3. Free essay

    different sectors of economy

    For example car industry is all those businesses and people involved in making cars. (Source: www.bbc.co.uk/bitesize) Industry is part of the economy and industries classified into primary sector, secondary sector and tertiary sector which cover all the businesses in UK. All three sectors show that they are linked together and often referred to as the supply chain. The supply chain involves a flow of production and processes through each of the three industrial sectors. (Source: www.thetimes100.co.uk) * Primary Sector Primary industries are those which use the earth's natural resources and produce raw materials for primary products.

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  4. Examining the world through Economic

    Scarcity means that people can not always fulfil their desires. Hence choices have to be made. For example, people have a limited amount of time every day, week or weekend and have to choose how they want to spend their time. Thus having to make choices arises from scarcity. In economics, the issue of choice is subdivided into three questions: * What - to produce? * How - to produce? * For whom - to produce? These basic questions are faced by everyone individual, group, community, business and government.

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  5. Globalisation in Malaysia

    Today, Malaysia is one of the biggest exporters of hard drives and memory chips across the world (gov.my). Growth, however, contracted during 1997 when Malaysia suffered from the Asian financial crisis, causing rise to unemployment and interest rates. In 1999, the economy began recovering and growth has continued since. At the end of 2008, sales increased in the manufacturing sector (the largest sector in the Malaysian economy) by 13.5% than in 2007. However, the number of people unemployed also rose by 3.1% or 33,826 persons, making the total to 1,065,278 people unemployed at the end of 2008. Malaysia's GDP has been steadily increasing since experiencing a decline in 1997 but experienced a sharp fall from 7.4% in 2006 to 2.1% in 2007, due to a drop in the rate of growth of exports.

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  6. Differences between the standards of living in Slovakia and The Hague

    There are many ways we can measure the standard of living of a nation. One of the important but imperfect ways to measure the standard of living is the level of national income. It is mostly measured in real national income per capita. This is done by dividing the total real national income (GDP or GNP) by the total population of the nation. (http://tutor2u.net/economics/content/topics/livingstandards/measuring_sol.htm) It can be measured also in other ways, such as: - The number of patients per doctor - a measure of health provision in a country - Hospital waiting lists for important operations - The number of children per thousand of the population who die each year (infant mortality rates)

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  7. Assess whether a tuck shop is likely to be a successful business if it were to set up in the school.

    Like before, using the profit margin can also be misleading as by giving a percentage of the revenue as the profit does not directly give you an amount. For this I will then use the amount of profit made to be my success criteria. It will be easy, as you simply need to look at the profit margin. However other success criteria can apply to the business being profitable. Method I began my research in order to start my business and I carried out a questionnaire, which was primary market research from which I got the data directly and allowed me to see which questions needed changing or adding.

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  8. Tax Policy in Europe

    would not have anything deductable. VAT received from customers is paid to Inland Revenue. The VAT rates for products and services are either 6% (food and medicines), 19% (general rate), or 0% (goods exported from the European Union). In the last case, the VAT would be collected by the country collecting the goods, not the country exporting. Examples of other types of products and services that gets an exemption on VAT are medical services, insurance transactions, and homecare services. However, VATs previously paid on them won't be deducted.

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  9. GDP and Growth

    There are two types of GDP, 'money' GDP and 'real 'GDP'. 'Money' GDP, known as nominal GDP, measures the value of the output produced in a given year and valued at the price of that year. 'Real' GDP measures the value of the output produced in a given year but valued at the price from the base year. Here is an example, according to the data from the UK National Income Accounts, the 'money' GDP for UK was �953,227million in 2000 and �1,110,296 in 2003, as the 'money' GDP in 2003 was greater than in 2000, it indicates that either

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  10. Free essay

    What are the main characteristics of a free market economy and centrally planned economy?

    In a fixed price system there is minimal incentive because the prices and wages are fixed, which demoralizes the employees, and thus decreases incentives. Nevertheless, the fixed price system also suggest that a greater majority of the society will be able to afford the good or service, and thus, it will be more beneficial for society, and not only those who can afford the good or service such as education and health care. A planned economy can often cause problems with the fact that they can misallocate resources, which means that there will be over production of goods.

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  11. Homelessness in Chicago

    Eventually, the city recovered from the fire and became the hub for the meat-packing industry in the United States. However, during the depression of 1893 the city once again encountered an extraordinary amount of people without anywhere to live. The weak economy played a major role in this, but it was the city's industrial growth and position as the hub for the country's railroad system which had the greatest impact. (Slayton) Word spread quickly of the opportunity to make a living in Chicago, and the immigrants were listening. It became a recipe for disaster; there weren't enough jobs for the overwhelming influx of people.

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  12. Explain how economic growth and the operation of a market economy impact on the global environment, and suggest ways in which action could be taken to limit this impact. √

    Indeed, OKv Adam Smith, an economist from the 18th century, introduced the idea of an 'invisible hand` as a metaphor to describe how markets work. He suggested that there are invisible forces (known as market forces) which bring together a buyer and a seller based on how much it costs to produce something and how much people are prepared to pay[S3]. If a business is not competitive in the pricing of goods consumers will go elsewhere to buy (the natural and the social: uncertainty, risk, change.

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  13. In order to effectively analyse Luxury Boats Ltd. and the framework of macro-environmental factors affecting the business, two analytical tools will be used; the PEST Analysis and the SWOT Analysis.

    Under Threats, the external factors that may cause harm to Luxury Boats Ltd will be examined. The key questions which need answering are; how can the company use each Strength, stop each Weakness, exploit each Opportunity and defend against each Threat? MARC MENENDEZ 05260233 PEST Analysis 1. Political * A Socialist government will assist for the economic advancement of the poorer sections of society at the expense of the wealthier groups. 2. Economic * Elections of 2002 return socialist government intent on economic policies designed to assist the poorer citizens at the expense of the wealthy.

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  14. Economics in a European Context Coursework - Monetary Union

    For example, Whiskey is exported from the UK to the EU, the Whiskey is sold to an Italian hotel, who in order to pay for it have to convert their Euros to Sterling. The cost of conversion will be passed onto the consumers in the hotel who may opt for a cheaper drink as a result of the increased cost. To combat this the Whiskey producer may artificially lower their prices so they are able to compete with Eurozone beverage producers, however this would reduce their export revenue.

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  15. world oil market

    As living standards increase more people are driving which results in greater fuel demands. Furthermore the world economy has grown as economic output has increased which means again more fuel is required, countries like china and India are industrialising at a very fast rate causing the demand for oil to increase sharply. The USA is the worlds biggest oil consumer using up 25% of the world's oil; this is a staggering figure given that the USA only account for 5% of world population, this culture of high fuel consumption is partly due to the cheap price of fuel in America and low taxation as well as relatively high average income.

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  16. mergers and acquisition

    Both mergers and acquisitions can be financed either through the use of stock, cash, or debt, or a mixture of all three, or a combination of two of the three sources of finance. There are three types of mergers and acquisitions between companies: 1. Horizontal integration - occurs as a result of a merger or acquisition involving two companies who operate in the same stage of production in the same line of business. Recent examples include the merger of Granada and Carlton to form ITV plc, and Wm.

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    They were commonly referred to as 'The Six'. The union was basically formed to enhanced peace, political and economic growth among members who were greatly devastated by War. The membership has risen to 25 following the joining of Poland, Romania, Bulgaria, etc. UK, Denmark and Ireland joined in January 1973, Greece in 1981, Spain and Portugal in 1986, Austria, Finland, Sweden, in 1995 while East Germany reunited with West Germany in 1990. The population of EU is in excess of 455 million people.

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  18. External Influences of Richer Sounds and Corus

    Corus are now creating wind farms enabling the production of renewable energy. Corus technologies are also being used in the automotive industry to produce stronger and safer cars. Both of these companies are affected by their competition in various ways. Corus and Richer Sounds want to offer their customers the best possible value and the best customer service; they also monitor their competitors. Corus and Richer Sounds check each of their competition's prices of competitors. These companies regularly carry out benchmarks where they check the prices advertised by other competitors and see how they compare.

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  19. Why did India launch a program of economic reforms in 1991? How successful these reforms have been?

    Indian development model and the reasons for economic reforms: In this section I am going to discuss the areas mentioned in the groups described in the introduction, of this essay. Fiscal deficit reduction and industrial and trade policy: In any country balance of payment can arise either because current account is in deficit; a country is importing more than exporting or capital account is in deficit. From my interpretation capital account is in deficit when capital is flowing out of the country than coming into the country.

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  20. Overview Of Japan's Economy

    Japanese land prices are customarily high, partly because of the nation's small amount of available land. Therefore, banks often accepted property as collateral for loans, and so land became the engine of credit for the entire economy. However in 1989, Japan's stock market crashed. Economic growth fell to 2.4%, and from 1998-2002 Japan had the lowest economic growth compared to all of the major economies. Over the past ten years, the Japanese economy has had moderate rates of growth but has periodically fallen back into a recession. Nevertheless, the economy overall appears to be healthy than it has been in a long time with strong external demand increasing output to 2% a year since 2002, which has also reduced unemployment rates.

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  21. Explain the link between saving, investment and economic growth, and consider the factors that influence the amount of saving individuals undertake.

    That is the main reason why these people have to obtain interest, should they postpone their consumption. And as Graph 1 shows the higher the interest rate is the greater the household's willingness to offer a higher proportion of their income is. The market supply of loanable funds is then the horizontal sum of individual "saving functions". Graph 1 Individual saving function (example) These loanable funds are demanded by those who want to invest but do not have a sufficient amount of their own savings. This demand by borrowers (mainly firms, less then government and households) is inversely related to real interest rate due to two reasons.

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  22. Outsourcing. From the us point of view, how large is the outsourcing phenomenon and what types of jobs are being outsourced:

    In addition the falling in transportation and telecomunication cost thas been a significant driver to outsourcing. But probably the biggest driver is the enormous difference in labor costs. For example, an employee who costs $15,000 per year in America might cost one sixth of that in India1. Some sectors such as the services industry, are essentially targeted by the outsourcing, international companies such as GE Capital and American Express have pioneered the outsourcing. Along with the services industry, there is also manufacturing, wich has mainly participated in the growing significance of outsourcing.

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  23. The effect of the Euro on 'The Carphone Warehouse' Plc

    Types of Cheating Plagiarism is defined as incorporating a significant amount of unattributed direct quotation from, or unattributed substantial paraphrasing of, the work of another. Collusion occurs when two or more students collaborate to produce a piece of work to be submitted (in whole or in part) for assessment and the work is presented as the work of one student alone. Penalties Where an offence is admitted, or the Course Director decides that cheating, plagiarism or collusion has occurred, a penalty will be imposed.

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  24. Analysis of growth in the UK economy

    During the 1950s, there were no concerns about the UK growth rate. The standard of living was still higher than that of any other EEC country except Belgium and higher than it had ever been in Britain's history. It was twice as high as Italy and 50% higher than West Germany. When compared to the performance of other countries, though, UK growth rates are less impressive. Other EEC countries had growth rates roughly double that of the UK, between 5% and 6%.

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  25. Fundamentals of Managerial Economics

    These countries control gas prices by the amount of crude oil they produce. To gain a better understanding of how the United States gets its gasoline and who supplies it, we will have to take a closer look at the degree of competition. Because of the nature of an oligopoly there is very little competition. The OPEC countries account for nearly 50% of the United States crude oil imports. The top three oil producing countries in thousand barrels per day are: Venezuela (1,372), Saudi Arabia (1,161), and Nigeria (1,044).According to OPEC's website, WWW.OPEC.org, their principle aim is the, "Co-ordination and

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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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