t_LWQQrpSc4 Inflation & balance of payments

Government objectives A positive balance of payments Low inflation Low unemployment Economic growth

Inflation rates Thailand3.4% UK3.1% Malaysia2% Cambodia18.7% Indonesia

Inflation inflation Employees will be ‘paid less’ People spend less (economic slow-down) Businesses are reluctant to open / expand Living standards fall

Low Inflation Low inflation Employees will have more spending power People spend more, businesses boom Businesses are quick to open / expand Living standard increases

Inflation Thailand’s Inflation Rate The inflation rate in Thailand was last reported at 3.40 percent in July of From 2000 until 2010, the average inflation rate in Thailand was 2.51 percent reaching an historical high of 9.20 percent in July of 2008 and a record low of percent in July of Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The most well known measures of Inflation are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy.

Inflation rates “inflation” refers to a general rise in prices measured against a standard level of purchasing power. Inflation is measured by comparing two sets of goods at two points in time Related concepts include: Deflation - a general falling level of prices Disinflation - the reduction of the rate of inflation Hyper-inflation - an out-of-control inflationary spiral Stagflation - a combination of inflation and poor economic growth Reflation - An attempt to raise prices to counteract deflationary pressures.

Nurses case study 1 – cut down 2 – fold in half 3 – stick in neatly 4 – answer the following questions If a nurse gets paid £19,000 per annum, how much more money is 2.75%? (show your working out) Explain what is meant when the article states that in real terms, nurses are facing a pay cut. 5 – Q&A UK inflation measures

Economic growth Thailand’s GDP = $272.43bn Laos’s GDP = $5.4bn Cambodia = $10.35bn Malaysia = $221.77bn India = $1.16trn America’s GDP = $14.3trn UK’s GDP = $2.67trn

unemployment Unemployed people do not contribute towards the economy, but actually cost the economy money The lower the unemployment the better. UK August = 7.8%. Thailand August = 1.4%

Balance of payments Exports Imports ฿ 20 ฿ 10 Deficit = ฿ 10 ฿80฿80 ฿ 120 Surplus = ฿ 40

Balance of payments Thailand$3bn surplus (2001) UK$25bn deficit India$1.1bn surplus America Cambodia Malaysia Indonesia

Homework 7 (a) Analyse the benefits to your country’s economy from a multinational manufacturer of computers locating a new factory there.

LO Explain how government intervention such as: Fiscal policies Monetary policies can influence the economy.

Government intervention Most countries have a mixed market economy. The government will have some influence on the performance of the economy. Fiscal policy Monetary policy Spending & taxation Interest rates

2 minute discussion End 1.1 Starting a Business Enterprise Discuss with the person next to you, what effect your ‘card’ would have on the economy.

The economic cycle Increase in GDP Increase in inflation Monetary policy Economy slows down Decrease in GDP Fiscal policy

Economic cycle Now complete the economic cycle, using these boxes to help you. Increase in GDP Decrease in GDP Unemplo yment at its highest Increase interest rates Increase unemployment People spend less Increase public spending Increase in inflation Business make less sales Business reluctant to expand / open Reduce taxes

Homework Complete inflation work sheet, answering all 4 questions.

What have we learnt? Discuss with a partner before you share it with the class