2.5.1: Causes Of Growth

Question 1

What are the factors of causes of growth?

Answer 1

-Land.
-Labour.
-Capital.
-Enterprise.
-Efficiency.

Question 2

What makes land a factor of economic growth?

Answer 2

-Discovery of new resources.
-Tax breaks for regional development.

Question 3

What makes labour a factor of economic growth?

Answer 3

-Size of the workforce.
-Quality of the workforce.

Question 4

What makes capital a factor of economic growth?

Answer 4

-Sustained investment.
-Technological advances.

Question 5

What makes enterprise a factor of economic growth?

Answer 5

-Incentives for business development (e.g. tax breaks and grants).
-Reduced ‘red tape’ - easier to set businesses up.

Question 6

What are the types of growth?

Answer 6

-Actual growth.
-Potential growth.

Question 7

What is actual growth?

Answer 7

Percentage change in real GDP.

Question 8

What is potential growth?

Answer 8

The rise in the productive potential of the economy (can be shown on a PPF).

Question 9

What does export-led growth result in for the short term?
[INTERNATIONAL TRADE]

Answer 9

A rise in AD.

Question 10

What does export-led growth result in for the long term?
[INTERNATIONAL TRADE]

Answer 10

Economic growth, as sustained high export levels forces firms to invest (to cope with increased demand for labour).

Question 11

What is red tape?

Answer 11

Unnecessary regulation that delays procedures.