the causes of economic growth...

There are clearly some benefits of economic growth. These benefits are most visible when for low income countries. Economic growth enables the possibility to deal with many serious problems of poverty, homelessness and lack of basic amenities. However there are clearly several issues, which suggest that economic growth, has contributed to serious social, environmental and economic problems, which have reduced living standards. This is not to say economic growth is doomed to bring unhappiness. In fact the challenge is to harness the potential of economic growth to make sure it really does increase sustainable living standards.
Benefits from economic growth are:
  1) Increased consumption. - consumers can benefit from consuming more goods and services. An assumption of economics is that consumption is related to utility, so in theory, with higher consumption levels, there is greater prosperity.
1) Improved Public Services. - with increased Tax Revenues the government can spend more on important public services such as health and education. Improved health care can improve quality of life through treating diseases and increasing life expectancy. Increased educational standards can give the population a greater diversity of skills and literacy. This enables greater opportunity and freedom. Education is seen as an important determinant of welfare and happiness.
2) Reduced Unemployment and Poverty -economic Growth helps to reduce unemployment by creating jobs. This is significant because unemployment is a major source of social problems such as crime and alienation. However, despite rapid increases in economic growth since the Second World War, areas of high unemployment in the EU remain. For example, in France and Spain there are currently high levels of structural unemployment. This kind of unemployment may not be reduced by economic growth.
3) Economic growth may lead to negative externality - it involves increase in output causes external side effects, such, as increased pollution. Global warming from pollution is becoming a real problem for society. The economic and social costs could potentially be greater than all the perceived benefits of recent economic growth. However, it is worth noting that economic growth doesn’t necessarily have to cause pollution. The benefits of growth could be used to develop better technologies that create less pollution. It is just at the moment this has been a low priority.
4) When it is economic growth I think it may have a big gap between poor and rich. It is perhaps a paradox that higher economic growth can cause an increase in relative poverty. This is because those who benefit from growth are often the highly educated and those who own wealth. In 1980s and 1990s higher growth in the UK and US has resulted in increased inequality. However, it depends on how growth is managed; economic growth can be used to reduce inequality. It is another paradox that as incomes increase and people are better off the level of crime has increased as well. This suggests that crime is not motivated by poverty but perhaps envy. One reason why crime rates increase is that quite simply there are more things to steal. Economic Growth has created more goods to steal. However the link isn’t absolute for example in recent years crime rates in US have reduced from their peak. But there has been a general association between growth and crimes. Economic Growth has enabled improved health care treatments, but at the same time there has been an unexpected rise in the number of diseases and illnesses related to increased prosperity. One example is obesity. Modern lifestyles and modern diets have created an epidemic of obesity, with significant proportions of the population expressing a desire to lose weight. It could be argued that problems such as obesity and stress related illnesses are not a direct consequence of growth. This is true, but, it is symbolic of the fact increased prosperity has created as many new problems as it has solved

revision chapter 5

The economy examine in:
* Economics growth - when economy increase in output.When output increasing,unemployment usually falls for economy it is better when unemployment is low.
* Inflation/deflation
* Assessed by examining it is balance of payments.
There are some reasons why inflation rate has fallen and stayed relatively low:
*reduction in inflationary expectations (result from government monetary policy)
* high value of the pound
* increased global competition ( when firms  have to keep their costs and prices low)
* advanced in technology adn the immigration from EU and the rest of the world it helped to increase AD and AS.
Inflation rate - the % increase in the proce level over a period of time.
Basicly government have always had general policy objections in the macroeconomy but in recent years many have more specific targets.
Sustainable economic growth - economic growth step by step =>increase in AD/AS=> trend growth (the expected increase in potential output over time.It is measure of how fast the economy can grow without generating inflation.
Current account deficit - when money going out from the country more then money going in the result of sales of it is exports,income and current  transfers from abroad being less than imports and income and current transfers going abroad.
Economic stability when:
balance of payments  position has been somewhat downgraded (decrease) as an objective.
Hyperinflation - an inflation rate above 50%
Nominal GDP - an output which is measured in terms of the prices in the year.Nominal GDP can be distorted by inflation.
When GDP risen it is mean that labour prodactivity is risen (output per worker hour)
Informal economy - in comparing country's real GDP over time and between country's, other problems cam occure,economic activity that is nor recorded of registered with the authorities in order to avoid paying tax or complying with regulations,or because the activity is illegal.
Consumer price index - a measure of changes in the price of a representative basket of consumer goods and services.
Retail price index - measure of infaltion that is used for adjusting and other benefits to take account of changes in inflation and frequently used in wage negotiations.

mod2;revision:

Government spending decisions are influenced by a several factors:
*the government view on the extent of market failure and it is chance and ability to correct it.
*the level of economic activity in the economy can have an infuence in government spending. (high level of uneployment may lead an increase in government spending and it will be shift to the right in AD and the out put in the economy.If it the high level of inflation the government may reduce government spending
*increase in health,education,transport the desire is made by voters, this can be made by desire to please the electorate(voters)  the government may win electorate by increasing in health,education,transport etc before election.
*WAR,TERRORISM,RISING CRIME, may have an increse in government spending.
Net exports (exports-imports) the influence on export revenue and import:
*real disposable income abroad - a rise in income abroad is likely ro result in more exports being sold.
*real disposable income at home - a rise in income in the own country may lead to fall in exports ( because firms may use goods from exports to the home thus will increase in AD.
*the domestic price level - the amount of exports may fall and the value of imports rise.If the domestic price level rises relative to the price levels in the country's trading partners.
*the exchange rate - a fall in a country's exchange rate will reduce the price of exports and raise the price of imports casued by inflation rates. this os likely to result in a rise in exports revenue and a fall in imports expenditure.If it will rise in rate is likely to result in fall in net exports.
*government restrictions on free trade - a country's net export
*Government restrictions on free trade - when a country's net exports may rise if other countries governments remove limits.(tariff-a tax on imports)
The relationship between AD and the price level.
There're 3 effects which explain why the AD curve is downward sloping (going down):
*the wealth effect - changes in housholds and firms real wealth when the price level changes. When the price level is fall it leads to increase in amount of goods and services that wealth kept in bank accounts and other financial assets in the form of money. It it a rise in the price level  it leads to reduce the price level  in purchasing power of wealth and it cause in AD to contract.
*the rate of interest bonds - if it increase in price level it can lead to sell financial assets (government bonds -a financial assets issued by the central government as a means of borrowing money)
to recive more money to pay a higher cost. Increase in the supply of government bonds to reduce their price.
*the international trade effect - increase in the price level will not lead to increase in prices and rate. It will have an effect on firms and housholds to buy more from foreign producers and less form domestic producers => net export would fall anf demand will contract.

mod 2;revision; half from the chapter 4

Aggregate demand (AD) the total demand for goods and services produced in an economy at a given price level.
AD=G+I+C+net exports
Price leve - the average of each of the prices of all the products in an economy.
consumer expenditure - spending by households on consumer products.
investment  - spending on capital goods.
government spending - spending by the government on goods and services. Net exports - (exports-imports). Consumer expenditure is consumtion. The largest component of AD.It is spending by households on clothing,food,insurance.*Investment is the most variable component of AD. Basicly government spend on education,health care,police services,public goods and NOT include 1) transfer payments 2) job seeker's allowance 3) pensions . 1)transfer payments -  money which transferred from one person(group) to another not with return. 2)  job seeker's allowance - a benefit paid by the government to unemployed and trying to find a job. 3) pensions - basicly grandfathers and mothers who have lived honestly and paid taxes and insurance.
Net exports add foreigners (people form abroad) spending on the country's goods and services and  deduct (take away) spending by the country's population in improts. If a country has a trade surplus (the value of exports exceeding the value of imports) with exports being greater than imports,then adding net export to C+G+I will shift to the right in AD if the existance of a trade deficit ( the value of imports exceeding the value of exports) would mean that AD would be lower.
There're a range of infuence on how much households spend:
*real disposable income (after taxes and inflation) this is the main influence on consumers expenditure. When rich people tend to spend more in total is average propensity to consume (apc) the proportion of income that is spent.
*Wealth - the more people have - the more they tend to spend.Wealth can be used to borrow or to spend it is called consumer confidence (how optimistic consumers are about future econimic prospects)
Change in the interest rate has important influence on consumers.Usually a fall in the rate of interest will a rise in consumer expenditure.
1) cheaper to borrow
2) it reduce the incentive to save, by spending people are giving up less interest.
3) those who are paying interest on mortgage/loan will have  more money to spend.
Net savers - people who save more than they borrow.
    St.day of poor people
redistribute income from the rich to the poor it will be an increse in total consumer spending.
Inflation - a sustained rise in the price level.
Savings is not part of AD.
Influences on savings include:
*real disposable income - save a higher proportion of the income (average propensity to save)saving devided by disposable income.
*the rate of interest - a rise in the rate of interest  increase the reward for savings and encourages people to save more.Target savers - people who save with a target figure in mind. They save to achieve a sum in savings.
*confidence and expactations - households and firms a tend to save more when they not sure about future.
*savings schemes - when people want to save in insurance adn pension schemes.
*range of financial institutions - a good deal with well-respected institutions  in the country to save.
*government policies - a decision by the government to introduce tax-free savings schemes it lead to encourage people to save more.
*the age structure of the populaton - basicly youngsters spend more in contrast with middle age.
Dissave - spending more then disposable income.
     Investment. Without investmnet it will not any business schemes and development in economics. Firms invest, when they expect the profit form the capital goods that they buy to be greater than their cost.
Influences on investment include:
*changes in real disposable income.  When real disposable income rising for consumer goods and services the demand is increase too.  This can to encourage firms to expand thier capacity.
*expectations - firms are much more likely to invest if they see future in the plane.
*capacity ultilisation - firms more likely to invest to work to full capacity.
*corporation tax - is tax on firms profit. Keeping profit may lead to increase in investment.
The rate of interest - increase in rate will lead to stop investment. reasons:
increase in opportunity cost of investment.
opting ti buy capital goods
invesment is financed out of retained profit (some by borrwing)
more expensive to borrow and will decrease in invesment
will reduce the demand for shares.
*advances in technology - firm may buy new equipment in case in better quality or to produce more cheaply.
*price of capital equipment a reduction in the price of capital equipment may increase in investment.
 

wanna be cool like Olexiy!!!...^-^

Government try to achieve:
to reduce unemloyment
stabilize balance of payments
reduce inflation
economic growth
and something else ^-^
cost push inflation (decreas AS)
demand pull inflation (increase AD)
What government shall do to reduce uneployment?
to:
1) to reduce taxes
2) to cut interest rate
3) to help to find a job
4) to REDUCE immigration ^-^ (india)
5) subsidy
6) to reduce import/more export
7) to reduce monopoly
8) to reduce "trade union power"
9) increase in nation service (army,,,etc)
10) reduce benefits =(
11) higher min.wage
12) increase in health,education,roads...etc
to reduce inflation:
1) increse in tax
2) to cut government spending
3) increase in interest rate:
Increased interest rates will help reduce the growth of Aggregate Demand in the economy. The slower growth will then lead to lower inflation. Higher interest rates reduce consumer spending because:
increased interest rates increase the cost of borrowing, reducing spending
Increased interest rates make it more attractive to save money
Increased interest rates reduce the disposable income of those with mortgages
4) privatisation and deregulation (transfer of assets from the public to the private sector)(The removal of government controls from an industry or sector, to allow for a free and efficient marketplace)
Causes of the inflation:
1) income
2) wealth
3) population
4) interest rate
5) high profits
6) income growth
and finaly : who is better arsenal or chelsea?