3.1 Economic growth Flashcards
What is economic growth
Growth in GDP (value of output) Over time
What is GDP
Gross domestic product is the total value of goods and services produced in the country in a year
GDP per capita
The total GDP / The total population
What is a boom
A period of high economic activity and high levels of low unemployment
Recession
A period when the country’s GDP falls for two or more consecutive quarters
how does economic growth affect employment
If less goods and services are being produced, less workers are needed to make them which leads to unemployment rising.
What can affect the rate of economic growth (7)
- Investment
- Changes in technology
- Education and training
- Labour productivity
- Size of workforce
- Natural resources
- Government Policies
How can investment increase economic growth (AD and AS)
- Spending more on capital goods will mean that firms can produce more goods and services which increases GDP
- Increase in investment increases AD which causes a shift in macroeconomic equilibrium to the right
How can changes in technology increase GDP
New tech can produce goods and services at an increased quantity for less money
How can education and training increase GDP
Increases the quality of work done and therefore increases productivity which will increase output
How can labour productivity increase GDP
More work is being done for the same price, so the output increases and GDP increases
How can the size of the workforce increase GDP (AD and AS)
- More people working
More income
More demand for products
More products made - More people in the workforce means more goods and services being produced
How can natural resources increase GDP
They can sell the natural resource e.g. Duabi selling oil
How can government policies increase GDP
(Infrastructure)
(Supply Side policies)
Government spending on infrastructure can increase productivity and therefore GDP
Subsidies provide money to firms to increase production and lower COP so more goods and services can be made
Labour force
The number of people in a country who work
