2.5-Economic Growth

Question 1

What is Economic Growth?

Answer 1

The expansion of productive potential of the economy.It can be depicted by an outward shift in PPF or an outward shift in a country’s LRAS curve.

Question 2

What are the Factors which cause Economic Growth?

Answer 2

It occurs due to an improvement in the quantity or quality of one factors of production, or an increase in the efficiency of the way they are used.

Question 3

Examples of Factors that could influence EG

Answer 3

-More skilled workers
-Improved Technology
-More investment
-Discover new resources

Question 4

What is a negative output gap

Answer 4

When actual level of output is less than the potential level of output

Question 5

What is a Recession?

Answer 5

Negative economic growth over two consecutive quarters

Question 6

Consumption

Answer 6

total amount households planned spending on goods and services produced in the economy

Question 7

Government Spending

Answer 7

The spending of the public sector of the economy on goods and services

Question 8

fiscal drag

Answer 8

when real income decreases as tax deductions rise and thresholds are not adjusted to reflect inflation rates