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38: Economic Indicators - Coggle Diagram
38: Economic Indicators
Interest rates
The cost of borrowing or the reward for saving
Causes
Decrease in demand
Effects of Low Interest Rates
Business
Expansion and new product development will increase
Repayments on loans will fall, meaning lower business costs
Economy
Decreased DIRT paid
Reduced cost of national debt services
Reduced unemployed
Household
Increased borrowing & household debt
Decreased saving
More disposable income for loan holders
Inflation
An increase in the price of goods and services over time in a country
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Measured by the Consumer Price Index (CPI)
Calculated every year by the Central Statistics Office (CSO)
Formula:
(Difference in cost of living between Year 1 and Year 2 ÷ Cost of living in Year 1) x 100
Causes:
Increase in the price of raw materials
Increase in indirect taxes (VAT)
Increase in demand
Increase in production costs
Effects of High Inflation
Household
Will have less disposable income
Will buy less
Business
Decreased sales as consumers will have less disposable income
Discourages expansion and investment
Workers may demand higher wages
Economy
Irish products will be more expensive abroad
Government spending will increase
Employment rates
The number of the labour force that are employed in a country
Formula:
(Number of employed persons ÷ Total labour force) x 100
Causes
High inflation
Technological advances
Effects of High Unemployment Rates
Household
Lower standard of living
Decrease in demand
Some may have to emigrate
Business
Harder to attract extra finance
Economy
Increase in jobseeker's benefit payments
Reduced economic activity
Economic Activity
The amount of goods and services produced by an economy from year to year
Formula:
(Difference of Production from Year 1 to Year 2 ÷ Production in Year 1) x 100
The Economic Cycle
The levels of economic activity over time
Stages:
Boom
A continuous and rapid period of economic growth
Slump
A decrease of economic activity
Recession
A general slowdown in the level of economic activity
Growth
An increase in economic activity
Depression
A severe and continuous recession
National Debt
The amount of money a country's government has borrowed
Paying this off is called "National Debt Servicing"
Managed by the National Treasury Management Agency (NTMA)
Effects of High National Debt
Household
Higher taxes
Degradation in public services
Lower Disposable Income
Business
Higher taxes
Less sales as consumers will spend less
Reduced investment
Less demand leading to job loss
Economy
Cut back on public services
Large opportunity cost
Causes
Increased government spending
Widespread unemployment
National Income
The total value of all goods and services produced in a country in a year
Expressed in:
Gross Domestic Product (GDP)
All products produced in a country by either native or foreign businesses
Gross National Product (GNP)
All products produced by companies owned by a native of a country
Calculated by the General Statistics Office (GSO)