Notesale: Turn your study into money

Document Preview

Extracts from the notes are below, to see the PDF you'll receive please use the links above

---

•

Using your knowledge of Economics so far plus additional research,
explore the performance of the UK economy over the last 10 years

•

Explain as far as possible the connections between the various macro
indicators

•

Give particular emphasis to the period of volatility commencing in 2008

Over the last ten years, the UK
economy in terms of real GDP has
experienced fluctuation
...
9% increase in GDP growth,
and then in 2004 and 2005 the growth
rate remained constant at around 3
...
Then in 2006 GDP
growth reduced slightly, only growing
by 2
...
7% in 2007
...
This also suggests that
policies and management strategies for the GDP growth maintenance were successful, and
that the UK economy was stable and growing consistently
...
8%, before then decreasing further to -5
...
This two
year consecutive negative GDP growth rate in the UK, was a depression
...
The Credit
Crunch was caused by a crash in the US housing market
...
Due to the lack of interest in loans or investment from the banks, they began
targeting those who had never bought or owned a home before, and had no previous credit
ratings, cheap introductory mortgages with low interest rates
...
Interest rates then rose and some borrowers
began to suffer, and house prices also began falling
...
The UK bank Northern Rock
was the first UK bank to suffer because it could not borrow money in order to fund its
lending, so it had to take an emergency loan from the Bank Of England, which caused
unrest amongst customers
...
The banks were also continuing
to struggle, finding it difficult to rebuild their finances afters billions were lost from potential
profits, so they were ever more reluctant to give out loans
...
This provides the
explanation for the negative GDP growth figure in the UK in 2008, but mainly in 2009 due to
the large difference from the previous year
...
7%
...
But in 2011 growth rates slowed down once again at 1
...
2% in 2012
...

In the UK, the unemployment
rate over the last 10 years has
increased
...
9% and
5%, which in relative terms is
quite a low figure, indicating a
high demand for labour within
the economy
...
7% along with 2005
...
However another explanation for this increase is
that in 2004, the UK opened its doors to Polish migrant workers after Poland joined the
European Union as part of the A8 group of countries that became newly involved in the EU,
including Latvia, Lithuania, and Slovakia, alongside other Eastern European countries
...
Most of the migrants received by the UK were from Poland,
and almost all of them were economic migrants, taking up lower paid jobs that the general
public in the UK before this time had not been interested in being undertaking
...
In 2006 the level of unemployment
reached 5
...
Then in 2007 there was an increase in unemployment to 5
...
1% in 2008
...
5%, and reached a twelve year high of 7
...
This sudden increase
in unemployment in the UK is likely to have been related to the Credit Crunch
...
This meant that any credit that would have previously
come from banks was unavailable to businesses, leaving them few options in order to cut
costs to survive
...
This then lead to a reduction in demand of goods and services
related to staff cuts, leading to yet further job cuts
...
8% unemployment
was reached, showing more positive signs of a recuperating UK economy coming out a
recession
...
4%
...
8%, before more recently arriving at 7
...

CPI, or Consumer Price Inflation,
measures the inflation on consumer
goods and services
...
3%
...
4%, and in 2005 it
rose again to reach 2
...
2006 saw CPI rates fall to
around 2% in 2006, and then on to 1
...
CPI reached a high of around
15 years in 2008 at 5
...
The recession
would have impacted inflation rates because of the financial shortages within the economy
...
1% in late 2009, the rate of Inflation in the UK consumer economy had
plummeted following the recession, and then in 2010 it was back up at 3
...
2%
...
0% index were far from being achieved in the
current trend
...
With the cost of living rising, a change in 2012
to a CPI of 2
...
In 2013, a so far a slightly more manageable
and stable rate of 2
...




---