Summary for Unit 2

I am writing for the topic that i am weak at and the points normally i missed out or dun remember.

Capacity utilisation is the extent to which firms using capital goods.

Factors affect Saving.

• Real disposable income
• Interest rate
• Age structure of the population
• range of financial institutions
• Confidence and expectation.
• Government spending.(Welfare benefit that may discourage saving)

Factors affect Investment

• Interest rate
• capacity utilisation
• Advanced technology
• corporation tax
• the current situation of economy
• price of equipment

Factors of Government spending

• The situation of the economy
• the extent of market failure
• wars

Cost of economic growth

• Pollution(which would have a harmful effect in the long run),congestion
• demand-pull inflation
• People did not get happier as they get richer.
• the profit may not be evenly distributed

Benefits of economic growth

• lower unemployment
• fiscal dividends
• better standard of living, quality of the life
• reduce poverty
• accelerator effect of growth on capital goods
• improve international trade position

Cost of unemployment

• loss income
• loss total output
• increased government spending(opportunity cost)
• fiscal cost
• demotivating(long term out of employment)
• social instability