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Essay Plans Unit 2 ECON2 - Economics: Macroeconomic Performance $10.57
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Essay Plans Unit 2 ECON2 - Economics: Macroeconomic Performance

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Detailed essay plans on macroeconomic performance.

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  • August 7, 2024
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  • 2024/2025
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Macroeconomics performance essay plans

Economic Growth

Using at least one example of each, explain how demand-side and supply-side
shocks might harm a country’s economic growth. (15)

Intro

 A demand side shock is
 A supply side shock is
 Economic growth is one of the main macroeconomic objectives
o It adds to the competitiveness of the nation’s economy

Demand side shocks

 Global recession
o Leads to reduced consumer spending
o Decreases aggregate demand
o Lowers production
o Job losses
 Demand pull inflation
o Lower incomes
o Speculative demand
o People reduce spending further
 AD/ AS curve
o Shift right in AD curve

Supply side shocks

 Sudden increase in oil prices affecting production costs
o Reduced productivity
o Higher inflation
o Decline in output
 AD/ AS curve
o Shift right in AS curve

Combined effects

 Affect each other – interconnected
 High inflation causes a drop in consumer purchasing power
o Further reduction in demand
o Increased uncertainty
o Investment reluctance
o Speculation

, Evaluate the likely impact of world economic growth both on the UK economy and on
individuals in the economy. (25)

Introduction

 World economic growth is
 In a world of globalisation and technological advancements, there is an
increasing interconnectedness of global economies
 Affects UK economy because of affecting exports, imports and global
competitiveness
 Affects individuals through changing prices depending on whether inflation is
present
o Cost push – price of raw imported materials

Impact on UK economy

 Increased demand for UK exports
o Attraction of FDI
o Benefits for job creation and technology transfer
o Global economic growth can boost demand for UK exports abroad
o Makes UK more competitive
 Technology sector
o Spread of technological advancements
o Improves productive capacity of economy
 Financial services
o Reliant on FDI to run effectively
 AD/ AS curve
o Shift in LRAS curve outwards
o Shift in SRAS curve outwards
 Exchange rate fluctuations affecting competitiveness
o Hedging or trade agreements might mitigate exchange rate risks
o Booming world economy might intensify global competition
o Make it more difficult for UK industries to compete
 Traditional manufacturing sectors
o Other countries have more efficient production process
o Hinders competitiveness
 Cost push inflation
o Increase in price of raw materials
o Increases costs for firms
o Firms pass on increased price to consumers
o Consumers have less disposable income and growth is limited

Impact on individuals in the UK economy

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