Week 6

Question 1

what are 6 different aspects an economy can become unbalanced in

Answer 1

• GDP components
• Trade balance
• Fiscal Finances
• Size of public sector
• Income distribution
• regional inequality

Question 2

GDP by expenditure equation

Answer 2

GDP = C + I +G + (X-M)

Question 3

What percentage of the components make up GDP

Answer 3

C = 66%
I = 13%
G = 20%
X-M = -2%

Question 4

UK is a consumption-driven economy,
is this a negative aspect of the UK

Answer 4

consumption is fuelled by a series of factors:
- confidence
- availability of credit
- job security

these are all behavioral factors that can switch at any moment

Question 5

UK naitonal debt definition

Answer 5

accumulated value of all budget positions taken up by the UK government

Question 6

The UK national debt is 90% of the UK’s GDP as a percentage,
why is this bad?

Answer 6

• debt and interest repayments grow
  –> debts acts as a burden on an economy
  —-> this results in economic activity being crowded out

Question 7

what as a sustainable percentage of UK national debt as a percentage of GDP

Answer 7

60%

Question 8

total managed government expenditure definition

Answer 8

describes the total amount spent by the government as a percentage of GDP