Financial crisis, increased borrowing costs, tightening of acces to finance, falling house prices, stock market losses, high levels of debt, raising oil prices
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What is the impact of a recession?
high unemployment, less job vacancies, falling living standards, high demand for higher education, falling inflation, depreciation in sterling, pressure on governments budgetary position
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What moneytary measures control the level of aggregate demand?
cuts in the interest rate, increased quantatitve easing, acceptance of the fall in the value of sterling
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What fiscal measures control the level of aggregate demand?
cuts in taxes, increasing other taxes such as tor rate of income taxes, higher government spending
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What are the advantages for firms in a recession?
Low wage inflation, larger pool of available workers, high demand for inferior goods, higher domestic demand if currency depreciates
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What are the disadvantages for firms in a recession?
Lower demand, negative equity and possible bankrupcy
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What are the advantages for households of a recession?
Lower Borrowing cost and mortgage repayments, lower income tax, cheaper goods and services
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What are the disadvantages for households in a recession?
Falling real income, More expensive imports and foreign holidays, threat of unemployment
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Other cards in this set
Card 2
Front
What is the trend rate of economic growth?
Back
The average sustainable rate of economic growth over a period of time it is between 2.5 and 2.75%
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