Economic Questions

      a. BOOM and BUST. In the 1980s economic growth was too fast and unsustainable therefore inflation increased to over 10%. To reduce this inflation the government increased interest rates which lowered spending.
      b. Joining the Exchange Rate Mechanism. When committed to maintaining a high value of the pound. This requires high interest rates, which in return will cause a fall in aggregate demand.
      c. High interest rates increased the cost of mortgage interest payments. Many would be forced to sell. This would cause a fall in house prices. Falling house prices causes a decline in consumer wealth and lower confidence. This also causes lower spending.
  2. Some big event that changes or impacts the economy in some way. Usually it will effect supply and demand. Positive shocks can increase income because it’s something that would make people want to invest their time and money. Elections can very well be influenced by this.
  3. Macroeconomics is the economics of a broad and big coverage. Like the U.S economy, while micro is the economics of small things like single individual’s economy. They relate because they both are involved in the study of economics and the coincide with each other.
  4. I think GDP is good for this country due so that one knows the actual value.
  5. Usually it can be calculated annually.
  6. The raise in supply cost and the drop in demand can cause constant inflation. The supply goes up so the product goes up to keep at the same margins.
  7. Sum of consumption, investment, government spending, and net exports are four of the things that make up GPD.
  8. Real is and can be adjusted while nominal cannot be. Nominal is more of the effect and cant be adjusted.