economic developments in affluent society

Question 1

why was there optimism and boom in the aflfuent society? (15)

Answer 1

-food rationing ended in july 1954
-increased burth rates post war,
(1861 51 million poeple in GB/5% up)

-increase in oversease trade= caused higher levels of earnings from exports and investmants=higher employment
((1955 full employment achieved)

-was expansion in electrical and engineering work

-financial and proffesional services to transport and sales services grew(1960, 5 million employed in industry)

-wages rose (for men from£8.30 [1951] to £15.36 in [1961]

-butler provided ‘give away’ budjet, where middle class tax was cut by £134 mil

-produced 29% more good than in 1951

-consumerism growth

-poeple could buy cars

-stop go economics create large internal consumer demand

-sterling regain value over dollar

-april 1959 provide tax cuts of £370 million

-national income commission

-lower bank rate=more consumer spending

(1955) unemployment less than 1%

-National Economic Development council (NEDDY)

Question 2

what is the “stop-go” economics?

Answer 2

-attempt to control growth of economy when in danger

Procces:
-when imports exceeded exports and balance of payments crisis- causing governmant implimenting controls, making demand fall and decrease outpot

-then governmant removes controls to increase frmand and rise imports

Policies to deal with the tensions of an expanding economy whereby low interest rates and high spending and halted by governments deliberately slowing this down by higher interest rates and spending cuts to try to prevent the economy overheating.

(cycle repeats)

Question 3

what are the consequences of the stop and go policies?

Answer 3

• faileed to encoruage increase in export trade to help bolster export indistries
  =creating problems with balance of payments

Question 4

what are balance if payments?

Answer 4

Difference between invisible imports and exports (shipping, banking and insurance)

Question 5

what is the national income commision?

Answer 5

(1962) kept eye on wages and prices

Question 6

what were the problems the economy and governmant faced? (12)

Answer 6

-1950s fall in traditional occupations (fishing, coal mining and ship building)

-industries production less than germany, france, italy, USA, netherland

-uk shares in workd trade fell by 10%
-increased production caused inflation
-difficult to persuade trade unions to not increase wages

-coal miners felt they earned less than others

-(1961) ‘stop go’ economic did’nt encourage exporters to increase trade exports
(create balance of payment problem)

-run on pound (pound decreases value as it is less confidant) caused from suez crisis

-‘pay pause’ held down wage inflation ( ask loan from international moneyary fund)

-rejection of EEC application

-100s of branch lines and 1000s of stations axed
=rural areas isolated

imports remained 20% higher than exports that just rose over 10%

Question 7

who was peter thorneycroft?

Answer 7

-conservative mp from 1938, resign ed as chancellor of Exchequer in 1958, then returned to cabinet in 1960

Question 8

how did peter thorneycroft beleive ‘stop go’ system should be stopped?

Answer 8

‘monetarism’ which limited wage increase and cut money supply

Question 9

what were the reason why macmillan ignored thorneycrofts suggestions

Answer 9

-lead to increase unemployment
-increase cutbacks in housing
-want expansionnist economy
-would anger trade unions