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Negative Impact of Economic Growth: Explanation

The document discusses the negative impacts of economic growth, such as increased income inequality, and explains the conversion of car prices from pounds to euros. It also covers the effects of reduced tariffs on supply and demand, as well as the implications of rising wages in Mexico, highlighting both positive impacts on purchasing power and potential challenges for businesses. Additionally, it outlines how education and training can enhance Vietnam's productive potential, while also addressing challenges like brain drain and skill mismatches.

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2 views4 pages

Negative Impact of Economic Growth: Explanation

The document discusses the negative impacts of economic growth, such as increased income inequality, and explains the conversion of car prices from pounds to euros. It also covers the effects of reduced tariffs on supply and demand, as well as the implications of rising wages in Mexico, highlighting both positive impacts on purchasing power and potential challenges for businesses. Additionally, it outlines how education and training can enhance Vietnam's productive potential, while also addressing challenges like brain drain and skill mismatches.

Uploaded by

wardawr11
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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1- €16,500.

Explanation
Negative Impact of Economic Growth
Economic growth can lead to increased income inequality within a society. As
the economy expands, the wealth generated may not be distributed evenly
among the population. This can result in a situation where a small percentage of
individuals or corporations accumulate significant wealth, while others may see
little to no improvement in their economic status, leading to social tensions and
dissatisfaction

Calculation of Price in Euros


To convert the price of a UK manufactured car from pounds to euros, we use the
exchange rate provided. The car is priced at £15,000, and the exchange rate is
£1 = €1.10

First, we multiply the price in pounds by the exchange rate:

$$15,000 \text{ pounds} \times 1.10 \text{ euros/pound} = 16,500 \text{ euros}$
$15,000 pounds×1.10 euros/pound=16,500 euros

Thus, the price of the car in euros is €16,500

2-

Key Concepts:

 A tariff is like a tax on imported goods that increases their price


 When a tariff is reduced, the supply curve shifts downward
 This leads to a lower price and higher quantity demanded

Analysis of the Diagram:

1. The original supply curve is marked as S (tariff)


2. The demand curve is marked as D
3. Initial equilibrium is at Pe and Qe

How to Show the Changes:

1. When the 8% tariff is decreased:

 The supply curve (S) will shift downward


 This represents lower costs for suppliers
 Draw a new supply curve parallel to the original but lower
2. The new equilibrium will show:

 A lower price (P1)


A higher quantity (Q1)
3- Let me help you explain the impact of wages rising faster than
inflation in Mexico, where wages increased by 20% while inflation
was 3.4%.

Key Impacts:

1. Real Wage Increases


 Real wage = Nominal wage increase - Inflation rate
 In this case: 20% - 3.4% = 16.6% real wage increase
 This means workers' purchasing power has significantly improved
2. Economic Effects:

Positive Impacts:

 Increased consumer purchasing power


 Higher standard of living for workers
 Potential increase in consumer spending
 Reduced income inequality
 Greater economic security for low-income workers

Potential Challenges:

 Higher labor costs for businesses


 Possible reduction in business profitability
 Risk of reduced employment if businesses can't afford higher wages
 Potential increase in prices as businesses pass on costs
 Possible decrease in international competitiveness
Tip
Remember that real wages are what matter for living standards - it's the purchasing power
after accounting for inflation that determines how much people can actually buy.
_______________________________________________________________________

Here's a breakdown of how education and training can impact the productive
potential of a country like Vietnam:

Positive Impacts:
 Increased Human Capital: Education and training equip workers with the
knowledge and skills needed to be more productive in various sectors,
including IT. This leads to a higher-skilled workforce, which can contribute to
economic growth.
 Technological Advancement: A well-educated workforce is better equipped to
adopt and innovate new technologies. This can boost productivity and
competitiveness in industries like IT.
 Diversification of the Economy: Investing in education and training can help
countries like Vietnam diversify their economies by creating new industries
and job opportunities.
 Reduced Unemployment: By providing unemployed workers with IT training,
the government can help them acquire skills that are in demand in the labor
market, reducing unemployment rates.
 Improved Standards of Living: A more productive workforce can lead to higher
wages and better living standards for individuals and families.
Potential Challenges:
 Brain Drain: If the education system produces highly skilled workers, there's a
risk that they may seek better opportunities abroad, leading to a "brain drain."
 Cost of Education: Investing in education and training can be costly, and
governments need to ensure that the benefits outweigh the costs.
 Quality of Education: The quality of education and training programs is crucial.
If the programs are not up to standard, they may not produce the desired
results.
 Mismatch of Skills: There's a risk that the skills acquired through education
and training may not match the needs of the labor market.
In the context of Vietnam's IT sector:
 Increased IT Workforce: The government's initiative to train unemployed
workers can significantly increase the number of skilled IT professionals in the
country.
 Boost to IT Industry: A larger pool of skilled IT workers can attract more IT
companies to set up operations in Vietnam, leading to economic growth.
 Innovation and Competitiveness: A well-educated IT workforce can drive
innovation and help Vietnam compete globally in the IT sector.

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