2.1 Economic Growth Flashcards
What is economic growth?
An increase in the production of goods and services in an economy over a period of time.
Economic growth is often measured by the increase in real GDP.
What is the primary policy objective of economic growth?
To improve the standard of living and create jobs.
Economic growth aims to enhance the overall well-being of the population.
What are the different stages of the economic cycle?
- Expansion
- Peak
- Contraction
- Trough
These stages reflect the fluctuations in economic activity over time.
What is the difference between real and nominal Gross Domestic Product (GDP)?
Real GDP is adjusted for inflation, while nominal GDP is measured at current market prices.
Real GDP provides a more accurate reflection of an economy’s size and how it’s growing over time.
How do you calculate economic growth rates?
Economic growth rate = [(GDP in current year - GDP in previous year) / GDP in previous year] x 100
This formula helps determine the percentage increase in GDP over a specific period.
What is GDP per capita?
GDP per capita is the Gross Domestic Product divided by the population of a country.
It provides an average economic output per person, indicating the standard of living.
Explain short run and long run economic growth.
Short run economic growth is influenced by changes in demand, while long run economic growth is driven by increases in productivity and technology.
A diagram can illustrate the differences in growth influences over varying time frames.
Evaluate the causes of economic growth in the short run.
- Increased consumer spending
- Government policies
- Investments in infrastructure
These factors can lead to immediate boosts in economic activity.
Evaluate the consequences of economic growth in the long run.
- Improved living standards
- Environmental impacts
- Income inequality
Long-term growth can have both positive and negative effects on society.
