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Topic 6 - Coggle Diagram
Topic 6
Major world events
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War
WHen a country is at war, there can be a range of effects, the country must fund the war and therefore taxes may increase or the government must borrow more
Increasing taxes
Increasing sales taxes such as VAT or taxes on fuel or tobacco will increase inflation and have an impact on an individuals budget
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There is a big opportunity cost of war, e.g. the war in iraq has cost the USA well over 1 trillion which could have been put towards the healthcare of the citizens
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Pandemics
Business closures
Debenhams closed because people were not out buying and spent money on essentials instead, bars and pubs rely on people going out and therefore many had to close down permanently as they could not afford the running costs such as mortgage repayments
Government deficit
Government borrowed more than ever outside wartime, this was because they had to fund the vaccines as well as schemes like the furlough scheme
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Lockdowns -
Lockdowns kept people inside without the ability to go out ad spend money, however this lead to an increase in some companies shares such as pelton as this was a company that allowed people to exercise as home
Political Change
some governments are business friendly that promote the growth of business through relaxing regulations and tax which may make it cheaper to the consumer
other governments are more cautious and put regulation in place which inhibits growth but promotes consumer safety
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Weather patterns, climate change and natural disasters
It is now accepted that world temperatures are increasing as a result of human greenhouse gas emissions e.g. carbon dioxide
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The price of grain directly impacts the price of food in your supermarkets, the grain can be greatly influenced by weather e.g. in 2011 when grain prices rose because of a spout of bad weather. Individuals may have to adapt their budget to suit the bad weather conditions
The insurance industry is becoming increasingly affected by adverse or extreme weather events, in the UK 1 in 6 homes is affected by flood risk, insurers may have to push up premiums by a lot if global warming is not mitigated due to the increase flood risk posed by it
Events in other countries can affect an individuals insurance premiums as well because of the globalised nature of many insurance companies
In coastal areas, erosion on cliffs my occur which puts danger in houses and if the government do not put up a management plan which protects your house, the value may fall due to being at risk of crumbling
earthquakes and other natural disasters cause massive economic disruption, e.g. in haiti in 2010 when an earthquake hit it cost around 8.5 billion
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In Iceland a volcano had disrupted flights by a considerable amount, this insurance companies were unsure whether to compensate holiday makers as flights were cancelled, this also disrupted business travel
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The global economy
The word economy means any economic activity that takes place in a specific region, that consists of all the goods produced and consumed
the MPC sets the interest rate there are consequences on inflation and the strength of pound that tie to the interest rate
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globalisation
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What fuels globalisation
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the movement of people (migration results in culturally diverse environments which affects the demands for goods in them areas
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