• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

GDP and Growth

Extracts from this document...

Introduction

Economics Assignment 2 (1) Explain the meaning and the significance of the difference between the concepts of 'money' GDP (*1) and 'real' GDP (*2) as shown over these two decades of UK economic activity. Make use of any graphs for these monetary indicators (in ´┐Żbillion) that you may have decided to prepare. The word Gross domestic Product, also known as GDP, is defined as the market value of the final goods and services produced within a country in a year. There are three methods of measuring the GDP: The product method, which focus on the firms and their production, to sum up the value of all goods and services that they produced in the country. The income method, which focus on the incomes that earned by those involved in the production process, those incomes are salaries and wages, rent, interest and profit. The expenditure method, also known as the most common approach to measure the GDP, is to sum up the value of all the expenditure on the output. The calculation is consumption (C) + Investment (I) + Government spending (G) and (Exports (X) - Imports (M)). In addition, the three methods of measuring the GDP must carry out the same result, in other words, which means that the total value of the production, the total value of the incomes and the total value of the expenditure must be equal. ...read more.

Middle

In fact, the UK economy has experienced unsettled growth over the period of time as fluctuation can be seen in the graph. The fluctuation is known as the business cycle and it can be described by four phases: A peak is the upper point of a business cycle, where an expansion ends and a contraction begins. The peak occurred in 1988, when UK just had experienced a steady growth from 1984 (2.5%) to 1988 (5.2%) and began to decline in 1989 (2.2%). A contraction describes a slow down in the pace of economy activity, which occurred between 1989 (2.2%) and 1991 (-1.4). A trough is the lower point of a business cycle, where contraction ends and expansion begins. The trough occurred in 1991. An expansion describes a speedup in the pace of economic activity, which occurred between 1992 and 1994, from 0.2% to 4.3%. In addition, if a contraction is long, which the GDP is negative for two successive quarters, then it will be described as a recession. It occurred between 1980 - 1981 and 1991 - 1992. The diagram on the right is used to interpret the concept of the business cycle. As the business cycle and the economic growth is fluctuate. ...read more.

Conclusion

Also, as the change of the trend and the consumer's preference, firms might produce products with high technology functions, e.g. cars, mobile phones, etc, to satisfy the consumers' demand, and as a result it will increase the GDP output. The firms' competitiveness could be the other factors that might contribute to the rate of the economic growth. For example, in a competitive market, firms are using different strategic to make them better than their competitors. Some firms might do well and make profits, so they might offer better wages to their employees and as a result they have more to spend and consume more. Some firms might not do well, but then they might still want to stay in the market, money might be invest in the firms or specialists staff might be employed to improve the firm's performance. They are related to the outputs, price and the unemployment rate and I personally think they are all considered to be the factors that affect the economic growth. Finally the world's economy growth could also be one of the factors. It is because the other countries's economic growth will affect the exchange rate, exports and imports and investments, etc. They are considered to be the factors that contribute to the rate of the economic growth. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Development Theories - Describe the Harrod-Domar model of growth

    It addition its generalised nature makes it somewhat limited. It does not set down the detailed nature of the pre-conditions for growth. In reality policy makers are unable to clearly identify stages as they merge together.

  2. Toyota Motor Company Limited

    An example would be plastic bottles, cans and glass for packaging soft drinks. So not all competition lies the same industry. There may also be a potential threat of new entrants, although some competitors will see this an opportunity to strengthen their position in the market by ensuring, as far

  1. Retailing In India - A Government Policy Perspective

    The financial intermediation section has sectoral caps like banking (49 per cent), insurance (26 per cent), as do some services like professional services (51per cent). Subject to these foreign equity conditions a foreign company can set up a registered company in India and operate under the same laws, rules and regulations as any Indian owned company would.

  2. Defining GDP

    Economic definition: The income earned by a country's people, including labor and capital investment. 10. Private sector My definition: The economy not controlled by the government. Economic definition: The part of a nation's economy which is not controlled by the government.

  1. Exchange rate.

    A floating exchange rate also has some disadvantages. The biggest disadvantage of floating exchange rate systems is their uncertainty. It injects the risk into the firms when they buy goods and services from abroad. For example, when the value of pounds falls more than the dollar price of cotton, then

  2. Kingfisher is the largest home improvement retailer in Europe and the third largest in ...

    This increased net cash inflow from capital expenditure by ´┐Ż718.1m which helped to reduce their debt levels and increase investments. However, all of the figures stated in the accounts don't take the rate of inflation into consideration. Table 5 This table shows how Kingfisher's turnover figures of the last five

  1. boom and bust

    The Republican Government with the introduction of taxation would have brought greater support in need, who could fuel the economy further since groups like blacks, rural workers and urban poor would be able to purchase the appliances and increase share purchase.

  2. Analysis of growth in the UK economy

    The figure rose from 17% in the early 1950s to 22% in the mid-1960s but this is behind France, who averaged 24% and Germany, who averaged 26% during the 1960s. Britain continued to rely on outdated capital that was less productive than the new capital stock that other major rivals such as the USA were investing in.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work