2.5.4: The Impact of Economic Growth Flashcards

1
Q

What are some of the impacts of economic growth on consumers (advantages) ?

A
  • More jobs, leads to higher wages, leads to increase in disposable incomes
  • Increase in consumer confidence
  • Increase demand for housing, leads to increased house prices
  • Increase value of shares as well
  • Increased value of houses and shares leads to the a positive wealth effect
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2
Q

What are some impacts on consumers (disadvantages)?

A
  • Demand pull inflation
  • could lead to increased inequalities and so
    may not have any effect on the average consumer
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3
Q

Impacts on Firms (advantages)

A
  • Increase in investment
  • Higher profits/ sales
  • Greater innovation through investment
  • Increase in productive potential
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4
Q

Impacts on Firms (disadvantages)

A
  • Higher inflation, leads to higher menu costs/ higher costs of production
  • If growth is unsustainable, workers are less productive
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5
Q

Impacts on the Government (Advantages)

A
  • Higher tax revenue
  • Lower spending on benefits
  • Opportunity to invest more in public goods
  • Budget surplus (cash inflow)
  • Lower unemployment
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6
Q

Impacts on the Government (Disadvantages)

A
  • If there is more consumption in the economy, there will be more consumption on demerit goods, which produces negative externalities
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7
Q
A
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