We will learn more about the impact of economic growth in chapter 34
The Impact of Economic Growth Economic growth impacts individuals, businesses and the economy in a number of ways:
GO
• Individuals have more disposable income and a higher standard of living. • Output increases and more jobs are created. • Emigration is reduced, meaning businesses have access to more skilled workers.
• The government collects more income taxes and pays less social welfare, which means it has more money to invest in services such as healthcare and education.
NATIONAL DEBT
Find out Ireland’s current
national debt. Record it in the Economy Watch section of your
Activities and Accounts Book and monitor it.
In chapter 31, we learned that if a government’s planned total expenditure is greater than its planned total income, it results in a deficit budget.
In the event of a deficit budget, the government will need to borrow money. The total amount of money borrowed by a country’s government is called national debt.
National debt is calculated by adding a country’s domestic debt (i.e. money borrowed in Ireland) to its foreign debt (i.e. money borrowed from foreign creditors). National debt = domestic debt + foreign debt
Most countries have national debt. It is often rolled over year on year. National debt is measured as a percentage of the GDP.
The Impact of National Debt National debt impacts individuals, businesses and the economy in a number of ways:
• Taxes may increase, resulting in less disposable income for individuals and profit for businesses.
• There is less money available to encourage enterprise and create jobs. • The economy will be less competitive.
• There is an opportunity cost as the money used to service debts could have been used to fund essential services, such as healthcare or education.
