Unit 41 Uk And Its Economy P2

Unit 41 task 2

P3

UK and its economy

There are three economic systems that countries' economies are operating in and these include free market, command economy and mixed economy

Free market economy means that the prices set for the products are determined by the open market and consumers. The laws as well as supply and demand are free from government intervention and other authorities. Furthermore, in free market the prices are usually set by the forces of supply and demand. This is the economic system that UK is in as well as other countries such as Australia, Hong Kong etc.

Command economy is where the government makes all the decisions as they usually have a five-year plan to achieve the goals of the country. The resources, labour etc.

This shows that there are more people entering the UK each year. After the vote of Brexit, UK has seen a big fall in the migration and population of the UK as less people are coming to the UK as well as many leaving to live abroad. Also, the international students coming to study in the UK has fallen rapidly which had the most effect on the big fall of immigration. Furthermore, there are many people aged over 50 years old due to the 'baby boom' that happened in 1960s where people were having many children. However, between 1970s and 2000s the number of people having children has rapidly dropped and therefore there isn't as many people in their 30s and

This stage is called recession and this is where the unemployment begins and wages starts decreasing. At this point people stop spending as much and therefore the customer demand starts decreasing. Due to fewer profits, the business will have to decrease its costs which might mean that some employees will lose their jobs. In result, this reduce the business investment and they are more likely to reduce their capacity meaning their business will start slowing down as well as the productivity. interest rates at this point is rising and therefore it encourages people to save more than spend. From this point the economy is most likely to come back up to a recovery or go into slump. The slump is when the economy cannot come back up in 6 months. At this stage the economy will be at its worst stage. The employment decreases further and people barely spend anything, only the goods that are essential such as food. This means that businesses selling luxury goods are most likely to be affected by the slump and it could result into the business failure the customer saving increase rapidly as the interest rates will be at its peak.

Lastly, when the economy is coming up and starts doing better, it goes into recovery stage. This is when the employment start rising and more people become employed. Therefore, the spending increases again and businesses starts to invest more money and employ more