3.1 - economic growth Flashcards
(22 cards)
economic growth
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
GDP
value added of all the g/s produced within a country in a year
types of income
wage, rent, profit, interest
when there is economic growth…
both output and incomes are rising
rate of growth calculation
change in GDP/original GDP * 100
GDP per capita
GDP divided by the population
economic boom
economy has high rates of economic growth over a period of time
recession
a period of time when the country’s GDP falls for two (or more) consecutive quarters
what causes economic growth
investment, changes in technology, education and training and labour productivity
how does investment cause economic growth
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
how does changes in technology cause economic growth
technological progress means the quality of capital goods improves, and a given quantity of capital can now produce more output than before
how does education and training cause economic growth
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
how does labour productivity cause economic growth
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.
labour force
no. of people who work in a country
benefits of economic growth
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
why is a rise in material living standards a benefit to economic growth
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.
why is a reduction in poverty a benefit to economic growth
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
why is a rise in the welfare of the population a benefit to economic growth
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
why is a rise in employment and a fall in unemployment a benefit to economic growth
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.
what are the environmental costs of economic growth
pollution, global warming
what are the social costs of economic growth
rise in living standards, reduction in poverty, fall in unemployment, congestion, loss of non-renewable resources, inflation
what are the social costs of economic growth
rise in welfare, lower quality of life, income and wealth inequalities
