Question

Data GDP Capital expenditure CPI (per annum) 2 quarters ago +0.3% 2.0% 2.1% p.a. 2 months ago 6.0% 0.2% 95.1 3 1 quarter ago +0.5% 2.5% 2.7% p.a. Last month 5.8% 0.4% 99.1 last quarter +0.8% 2.9% 3.2% p.a. This month 5.5% 0.7% 103.5 Unemployment Retail sales Consumer sentiment Business sentiment 4 All students should respond to Part (i) for question 2 AND All students should respond to EITHER Part (ii) OR Part (iii). Predict the impact on the economy and likely policy changes; AND Explain how this economic change would impact on the profits of small businesses with outstanding business loans, OR Explain how this economic change would impact on an investor's investment portfolio For part (i) construct well labelled, relevant graphs and refer to these graphs in your response to support your answer. Write your response in the answer booklet provided,

Answer 1

Answer: taut warto 1 quarter ogo 1054 2.5% Data | 2 Quarto ogo GDP +0:32 capital expenditure 20% seller annum) 2.2 .a. 2 months ago unemployment 60% _Petail sales consumoa Sediment 95-1*_ Business &timent 3 27% po last month 5:2%. 04! 99.11% 4 to al 12 22% po De eronth 5.52 0.7% 103.5 6 (i) Predst the impact on the economy and likely policy changes. . The impact on the economy is that the GDP is increasing as compared to the last quarter and the capital expenditure is ingesling as it would have been used to upfade and acquire now assets. unemployment is deceding because the world force is been put to we increase in aboor would dead to more production in long run. In short term, economic growth is caused in inGease in the aggregate demand (AD) Thus cause a higher level of GDP.

B -- --- -- - PA - - - - - - -- - - 4 4 GDP poucy change : An inGease in GDP will people will need raise the demand more money to for money because pachare the new GDP make the transaction necessarun to in GDP will cause an increase in the Thus the increase average interest rates on economy. robota

(ii) Economic change would impact on the profite of small business with out standing business loans. As the in Gease sales in the is increasing these will be profite few parts of the used to run the business can be paid off against Brofit and can be the rest the business plan there it will the reduce liabilities. (ii) The Economic change would impact on an investors investment portfolio As we can see that the business entiment is increasing from the previous quater the inverta portfolio will have good pool of investment as the over all GDP is increasing . Thus it is a good signal to have diverse pool of investment. It also Reduceres the risk of loss for the investor