2.5.1 Causes of Growth Flashcards
What needs to happen for economic growth to occur?
An increase in the quality or quantity of one of the four factors of production
What are the four factors of production?
Land, Labour, Capital and Enterprise
Land increasing economic growth and LRAS:
- Discovery of new resources
Labour increasing economic growth and LRAS: (2)
- Size of the workforce
- Quality of the workforce
How does the size of the workforce increase?
- Immigration
- The more people of working age
- Raising retirement age
- Provide free childcare
How does the quality of the workforce increase?
- Education; less likely to suffer from structural unemployment as they will have greater occupational mobility
Capital increasing economic growth and LRAS:
- New technology
-
Enterprise increasing economic growth and LRAS: (2)
- Governments offer tax benefits or grants
- Lower wealth distribution
Actual Growth:
Percentage change in GDP
Potential growth:
is the change in productive potential of the economy over time, so the LRAS or PPF curve shifts