Economics - to develop an understanding of what has happened in the Essay - 1

Economics - to develop an understanding of what has happened in the economy of the United Kingdom over the last two years - Essay Example The GDP of a country signifies the country’s overall growth. This indicates the heightened level of the economic activities and the high demand for the currency. The increase in the GDP always raises questions regarding the raised inflation levels as well which acts as an indicator to the monetary authorities to increase the interest levels within the country. The GDP and Inflation are normally based on two main concepts a) Consumer Prices Index and b) Retail Prices Index. The United Kingdom has seen a growth in the CPI over the years so as in the RPI. According to the national statistics, the CPI increase has been 5.2% and that of the RPI has been 5%. The increase in CPI and RPI is based a lot on the government and Bank of England contributions and looking at the stats it is very evident that the two have been contributing positively to the growth of the country (National Statistics: Inflation, 2008). The graph shows the growth over the past 4 years and if noticed there has b een an increase however this is expected to fall drastically over the next year. The Government and the Bank of England have made solid efforts to help the economy of the country. After studying the economy for the period 2006 – 2008, it has been noted that the Government and the Bank have played a very important role in the growth of the country’s economy. There have been constant efforts from the Government and the Bank of England to help the banks improve the current situation the government has taken steps of 50 billion pounds plan to nationalize the banks partly and also a promise of 250 million pounds has been made in the future. The Prime Minister has referred to this as a radical plan to assists the banks recover and get back into the normal course of business at the earliest. The Bank of England on the other hand has made available at least 200 billion pounds as short term loans to help