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economics theme 3 - Coggle Diagram

- - - - Linked to economic cycle, demand is low for workers
    - - unemployment that occurs as workers move between jobs ,short term, good for economy as sectors expanding
    - - workers unemployed at different times of the year , leisure tourism farming
  - - - cyclical unemployment - fall in aggregate demand in an economy
- - - - reeducing benefits - incentive for poor to work
  - - - reduce direct taxes to give workers more incentive to work and thus enable the economy to increase its supply of goods and services
        
        reducing benefits - if income person gets not much more than from benefits then little incentive to work
        
        costs of supply side policies
        
        time lags - major drawback - they can take a long time to be put inrto effect eg education and training could take number of years
        
        infrastructure can take many years to construct for example a motor network
        
        however...
        
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- - - - real gdp from nominal GDP = nominal GDP/ Average price level
      - nominal GDP - is expressed in monetary terms
      - real gdp - takes into account account inflation
  - - - pollution, economic growth often involves damage to environment, pollution and congestion ,which could lead to lower living standards.
      - scarce resources - more production, faster economy grows the faster it utilises its non renewable resources eg coal oil and gas, faster theyre depleted , less sustainable long run economic growth might be
      - inequality - highly unlikely that the benefits of economic growth will be distributed evenly, inequality worsen, larger gaps in society rich and poor gap widens
      - Inflation - as scarce resources reduce and demand continues to increase in an economy, creates inflationary pressure in an economy, may reduce real incomes.
  - - - Gdp per capita is the gdp divided by the population, output per head of population, average income of each person in economy
      - standard of living refers to how well off people are , most common way of measuring standard of living is comparing gdp per capita figures
      - boom - period of high economic activity and high levels of employment
      - bust - low levels of economic activity
        
        recesion - a period when the country's gdp falls for two or more consecutive quarters
        
        economic growth can come about because economy able to supply more goods and services, factors of production are needed in order to prduce these goods and services
        
        investment- spending on capital goods, more investment means economy has ability to produce more goods and services in the future
        
        changes in tech- tech progress measn the quality of capital goods improve, given quantity of capital can produce more goods than before
        
        education and training
        
        labour productivity also known as output per worker over time , size of workforce the economy can produce more if it has more of the factor of production known as labour
    - - rise in the material living dtandards , everyone has more output available to consume than before also the average income of the population increases more disposable income to spend
        
        a reduction in poverty as output and incomes rise gov gets greater tax revenue which they can use to raise standard of living eg benefits
        
        can also spend this on welfare
        
        rise in employment and fall in unemployment
        
        however...
        
        the production increase and consumption could lead to pollution eg consumption of cars
        
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- - - - most households recieve income in the form of wages so main reason in why people have dif incomes is that they have different jobs that pay different wages- workers in very skilled jobs tend to have high wages
        
        rent interest profit all forms of income
        
        jewellery and houses types of wealth
        
        wealth is a stock of assests which can be given a monetary value
        
        causes why wealth is distributed unevenly
        
        inheritance - in the uk some individuals and families have considerable assests, richest 10% have 45% of all the wealth - wealth can be passed down through generations but poor has no wealth to pass on
        
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  - - - income
      - inheritance
      - marriage
      - consequences
        
        more crime
        
        lower living standards and social tensions
        
        less opportunities poor housing poor health inequality of opportunity
  - - - more you earn more u get taxed
- - - - healthcare
        
        education
        
        defence
        
        direct tax is a tax on income or wealth eg income tax cooprperation tax and national insurance contrivution
        
        balances gov budget when tax rev = gpv spending
        
        defecit- when gov spending greater than tax rev
        
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- - - - rate of inflation - 2%
      - real value - value adjusted for inflation
      - rate of inflation can be measured using the consumer price index this is complied by the office of national statistics
      - types of inflation
        
        cost push inflation
        
        cost of production increases so does prices scarce resources
        
        demand pull inflation
        
        when total demand in an economy rises supply cant keep up fast enough to match demand not just consumers firms and gov are all demanding goods and services
        
        wage spiral inflation
        
        when prices begin to rise fast workers demand higher wages because they can afford less, firms have higher costs so theyll raise prices again.