2.1.1 Economic growth Flashcards
What are the 3 measures of economic growth
GDP
GDP per Capita
GNI per Capita
What is the definition of GDP
Value of all final G+S produced in a year
What does GDP measure
Growth
Living Standard
Drawbacks of using GDP to measure economic growth
Double counting
Informal Activity
Errors given vast data collection
Negative Externalities
Income Inequality
Output Produced
Other Quality of life aspects
What does GDP per Capita measure
Measures average individual income
Drawbacks of using GDP per Capita to measure economic growth
Same drawbacks as using GDP
Factor income abroad and significance of remittances
Influence of FDI and repatriation of profit
What is the definition of GNI per Capita
Total income generated by a countries factors of production regardless of where those factors of production are located
Formula of GNI per Capita
GNI = GDP + net factor income(income earned by domestic workers-income earned by foreign workers)
What is the definition of Economic growth
An increase in Real GDP in an economy in a year caused by an increase in AD or LRAS
What causes Short Run(Actual) Growth
An increase in AD
What causes an increase in AD
Lower interest Rates
Lower Income/Corporation Tax
Higher Consumer/Business Confidence
Higher Government Spending
Weaker Exchange Rate
What causes Long Run(Potential) Growth
An increase in LRAS
What causes an Increase in LRAS
Increase in Quantity/Quality of CELL
Increase in Productive Efficiency
What causes an increase in Quantity/Quality of CELL and productive efficiency
Increase in Labour Productivity
Increase in workforce size
Investment
Infrastructure Improvements
Increase in competition
New resource discoveries
What is the definition of a boom
When growth is strong and at its peak
