2.5.1Economics growth- causes of growth Flashcards
define economic growth
economic growth is an increase in the productive capacity of an economy, which may be ncreased by improving the Q^2 CELL
what fators lead to an increase in economic growth
an increase in the quality/quantity of CELL (capital/enterprise/land/labour)
Quantity: Quality:
-capital: increase in net investment/ advancements in technology
-enterprise: government schemes,i.e start up grants,,gov grants. / entreeneurship and management training.
-land: deforestation (discovering new land)/ better technology.machinery to better the productivity of land (e.g tractors)
-labour: migration, population growth, higher NMW, higher retirement age / better training and education, investment in technology
what is actual growth
actual grwoth is the percentage change in GDP, it is when the economy has actually produced more goods and services
what is potential growth, what is it determined by, what does this mean
potential growth is the increase in the productive potential of the economy over time, so the LRAS or PPF curve. It is determined by the factors of production and so potential growth means that there have been resources discovered or more technology developed that will allow the economy to grow more.
how does export-led growth effect countries and economies
how does it effect AD and then LRAS
export-led economic growth occurs due to an increase in AD caused by an increase in net trade.
it effects countries as it prevents the poor balance of payments that tends to occur as a result of economic growth.
although increased exports initially only increase AD, sustained, high levels of exports will force firms to invest and increase demand for labour, which will reduce unemployment and lead to economic growth.
