2.5 Economic Growth Flashcards

1
Q

What causes economic growth?

A

an increase in the quality or quantity of one of the FOPs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Actual growth

A

the percentage increase in a country’s real GDP + caused by an increase in AD

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Potential growth

A

long run expansion in the productive potential of an economy + caused by increases in AS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Negative output gap

A

occurs when the actual level of output is less than the potential level of output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Positive output gap

A

occurs when the actual level of output is greater than the potential level of output

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Benefits of economic growth (think economic agents)

A

higher disposable incomes, higher employment, higher profits for firms, fiscal dividend for govt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Cons of economic growth

A

inflation (dp), income inequality, environmental costs, current account deficit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly