A REPORT TO INVESTIGATE THE FORCES OF DEMAND IN THE UK

A REPORT TO INVESTIGATE THE FORCES OF DEMAND IN THE UK
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A REPORT TO INVESTIGATE THE FORCES OF DEMAND IN THE UK
Question 1a: Explain the general overview of the UK economy.
The UK growth trend analysis indicates a rise in the gross domestic product of 2.3 percent between 1990 and 2008. Likewise, this analysis showed that the GDP per capita that is in comparison to the total population rose by 43percent over the same time horizon. In addition to that, there was evidence of the remarkable improvement by UK of the productivity gap between the UK and Germany with reduction in the levels of unemployment within the UK. This growth in the Gross Domestic Product has been because of both then demand side and the supply side. The following is a research to explain the aggregate demand forces that have increased the Gross Domestic Product (Department for international development).
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In accordance to the research done by the global outlook summary conducted in 2015, the results show that the real GDP in United Kingdom, which is considered as a high-income country, was 2.9 higher in 2015 in comparison to that in 2014. In addition to that, it is expected to be 2.6 higher in 2016 as compared to that in 2015. This is a result of various aggregate forces of demand in the market.
The four factors of aggregate demand entail the consumption rate, the government spending, the rates of net investments and the net trade. The net trade is the difference between the exports and the imports. An analysis of these factors indicates that about two thirds of the overall demand was credited by a rise in consumption. In addition to that, about two thirds of the overall gross national product increase was because of the rise in the demand of the final good and services in the markets. This amounts from the interest of the UK population in their locally produced products and thereby increasing the demand for their products (Global economic prospects,2015,6).
In addition to this, there is a remarkable rise in the rates of the investments that takes a 14% share in the overall GDP market share. This amounts not only in the business tangible investments but also in the services sector that contributes majorly to the intangible investments.
In as much as the net trades have experienced rapid recession from 1990 to 2008, the net trades have since then experienced an increase with the number of exports exceeding the rates of importation. This has been accelerated by the low prices in oil that makes the manufacturing industries in all the economic aspects profitable (world economic outlook,2015,27)
In addition to these forces of aggregate demands, there has been a rampant increase in specialization in higher value added activities, an increased specialization in trade and a revolution in innovation in all the business sectors. This is a clear indicator of the forces of demand in the market. This innovation has paved ways for new business ventures for the UK by giving it access to new markets and new technologies. Likewise, these market competitions have challenged the UK to innovate and offer high quality goods and services and this promotes the consumers' confidence in the final goods and services. Concurrently, this accelerates the rates of consumptions in the locally produced goods and services.
Question 1(b) Factors that have propelled high and stable economic growth
The overall growth in the consumer spending is a key contributor towards the overall high and stable economic growth in the UK. This amounts from the rise in the demand in the markets of the final goods and services produced within the geographical boundaries of UK. In addition to that, the deceleration prices in oil have also propelled the growth in the economy. This is because these lower prices reduce the cost of production of the goods. This minimized cost of production plays an integral role in monitoring the rates of market inflation by ensuring that the prices stabilizes where there is a balance between the marginal cost and the marginal revenue.
In addition to that, UK has demonstrated rising rates of real income earnings per capita. This rise in the real incomes plays major role in the forces of demand and supply in the market. An increase in the real income also increases the disposable income per person and this accelerates the rates of consumer spending. In addition to that, the demand for facilities like the house facilities increases and this accelerates investments in the business sector. In addition to that, increase in the disposable income will concurrently increase the demand for quality services and quality goods in the market and this will propel the rates of innovation. In addition to that the service sector has also experienced a remarkable revolution as the people can cater for the quality services.
(c) Factors that have curbed the Low rates of unemployment
Various ways have been enacted to monitor the rates if unemployment. This is evidenced by the incre...