Help Improve AQA A2 25 mark essay (Essay Attached)Watch
So I am really struggling improving my 25 mark essays in economics to anything above about 15 and I really need an A. If anyone could help me improve my essay, or give any sort of tip it would be greatly appreciated.
This was an essay I did in class which my teacher marked at 16/25. (Apologies if there is any spelling mistakes, I got my sister to type it up)
"Evaluate the likely impact of world economic growth both on the UK economy and on individuals in the economy
In an economy economic growth is desirable. Economic growth is an increase in the productive potential of the economy, shown by an increase in GDP. As the world comes out of the global recession of 2008, we are starting to see growth again in global economies. Although as of last week growth in the UK fell to 0.7%. Growth is desirable because it benefits the economy macroeconomic indicators but also the standards of living of UK citizens. Standard of living is a measure of welfare, which is split into economic, personal and social. In this essay I will be analysing the impact of world economic growth on the UK economy and individuals.
World economic growth will have a direct effect on UK employment. Employment is extremely important in an economy because it has individual and national effects, for this reason it is a macroeconomic indicator of the strength of the economy. In the UK we have our lowest level of unemployment for 15 years of 7% however this could still be reduced further.
(LRAS CURVE SHIFTING TO THE RIGHT)
If there is economic growth (shown by a shift to the right of the LRAS curve from LRAS1 to LRAS2), AD in global economies will rise. If AD rises a country’s consumption will have increased. This could mean for the UK that demand for our exports increases. This will mean firms receive increased demand for their goods. Because of this a firm may wish to increase its capital stock to keep up with increased demand. The firm will therefore create new job opportunities. If this occurs in many firms up and down the country, unemployment will fall. This is a positive impact on the UK economy because employment is a macroeconomic indicator. However such an increase in demand for our exports may not occur because the UK is an exporter of luxury goods. Because of this, it could be said that our goods are inelastic in supply therefore any increases or decreases in supply will not affect quantity sold because a change in price does not affect quantity demanded. This would mean employment is not affected.
A further reason why global economic growth is desirable is that it may increase FDI. Because growth increases business confidence, it could be said that firms abroad may wish to locate and invest into the UK. The UK has one of the best banking sectors in the world, therefore such firms may wish to invest into the UK to be part of the sector. This amount of FDI is an injection into the circular flow of income which increases AD in the economy. But it will also have the effect of a multiplier. This is where an investment by a firm has the effect of increase national income, as money moves from hand to hand. This increase in national income would increase a standard of living of individuals in the UK, as they have a greater disposable income
(SHIFT IN AD CURVE TO THE RIGHT)
This increase in demand can be shown by a shift to the right of the AD curve
However it could be said that FDI is more unlikely to occur in the UK than other countries. Even though the UK has a highly skilled workforce, because wage rates are high and there are business taxes, it may be more costly for a firm to invest in the UK than it would be investing in other emerging countries such as India. This would imply that investment is unlikely to occur.
However the effects of economic growth are not all positive because they can cause inflation. If economic growth occurs, it is likely that disposable income will increase. If disposable income increases, economic theory says that consumption will increase. Depending on how close we are to the LRAS curve, this may cause demand-pull inflation. Inflation is a macroeconomic objective and anything above 2% a year is considered too high. However this is unlikely to occur if the UK is not on its PPF curve.
Overall I believe the benefits to the UK economy and individuals will be positive if global economic growth occurs. Since the 2008 global recession growth has been slow, and the UK could now benefit from this growth if it wishes to see incomes increase and unemployment falling faster, however there are still things to consider.
Firstly the time frame of economic growth will affect to what extent it benefits the UK. If global growth is only temporary, because the effects take a long time to pass through, the benefits may go unnoticed. This is quite often the case as increases in GDP are not linear but rather fluctuate. It takes prolonged steady growth to occur for business confidence and consumer confidence to rise, therefore it may only be in the long term that any benefits may be felt.
Furthermore the size of the growth is import. The UK for example Is experiencing an increase in GDP but is only small increase. Such an increase is not sufficient to promote investment and rises in demand with global economies. It is desirable and needed for growth to have a longer scope for it to be significant enough for economies to act upon it.
Lastly the benefits to individuals in the economy may not be the same, this is an example of lack of equality for example business owners may instead choose to absorb profits rather than passing them onto consumers. It would therefore be shareholders that benefit from economic growth
Furthermore it is the nature of society that those who are poorest will not benefit as greatly, because they will not receive the same increase in income from the multiplier effect as others that are more wealthy. Government may therefore need to look to re-distribute income to improve equality"