3.1 - economic growth

Question 1

economic growth

Answer 1

increase in the GDP of a country over time, increase in a country’s productive capacity, increase in the value of output in a country

Question 2

GDP

Answer 2

value added of all the g/s produced within a country in a year

Question 3

types of income

Answer 3

wage, rent, profit, interest

Question 4

when there is economic growth…

Answer 4

both output and incomes are rising

Question 5

rate of growth calculation

Answer 5

change in GDP/original GDP * 100

Question 6

GDP per capita

Answer 6

GDP divided by the population

Question 7

economic boom

Answer 7

economy has high rates of economic growth over a period of time

Question 8

recession

Answer 8

a period of time when the country’s GDP falls for two (or more) consecutive quarters

Question 9

what causes economic growth

Answer 9

investment, changes in technology, education and training and labour productivity

Question 10

how does investment cause economic growth

Answer 10

spending on capital goods. capital goods include machinery and equipment. more investment means that the economy can produce more goods and services in the future

Question 11

how does changes in technology cause economic growth

Answer 11

technological progress means the quality of capital goods improves, and a given quantity of capital can now produce more output than before

Question 12

how does education and training cause economic growth

Answer 12

affects quality and quantity of the work done. The more literate, educated, trained and skilled the workers, the higher the output of the country is likely to be

Question 13

how does labour productivity cause economic growth

Answer 13

measured as the output per worker over a period of time. e.g high number of electric cars produced per worker per year. high productivity encouraged economic growth.

Question 14

labour force

Answer 14

no. of people who work in a country

Question 15

benefits of economic growth

Answer 15

a rise in material living standards, a reduction in poverty, a rise in the welfare of the population, a rise in employment and a fall in unemployment

Question 16

why is a rise in material living standards a benefit to economic growth

Answer 16

when gdp rises at a faster rate than the population, GDP per capita rises meaning everyone on avg has more output available to consume than before.

Question 17

why is a reduction in poverty a benefit to economic growth

Answer 17

as output and incomes rise, the government will receive a greater tax revenue. This revenue will come from both greater incomes and more spending. The government can use the extra revenue to raise the living standards of those iwth lower incomes

Question 18

why is a rise in the welfare of the population a benefit to economic growth

Answer 18

as economic growth means that the government is able to collect more taxes both from incomes and from spending, this means it has more revenue which it can spend on services like health and education improving general welfare of the population

Question 19

why is a rise in employment and a fall in unemployment a benefit to economic growth

Answer 19

more workers may be required to produce the extra output brought by economic growth therefore there will be a rise in employment and the unemployment rate will fall.

Question 20

what are the environmental costs of economic growth

Answer 20

pollution, global warming

Question 21

what are the social costs of economic growth

Answer 21

rise in living standards, reduction in poverty, fall in unemployment, congestion, loss of non-renewable resources, inflation

Question 22

what are the social costs of economic growth

Answer 22

rise in welfare, lower quality of life, income and wealth inequalities