3.1 Economic Growth Flashcards
Short run economic growth definition
Growth based on increased utilisation of unemployed resources
Long run economic growth definition
Growth based on increasing the potential output level of the economy
What would short run growth look like on a PPC curve?
Movement of a point inside the curve to onto the curve
What would long run growth look like on a PPC curve?
Expansion of the whole curve right
What can short run growth be caused by?
- increase in AD
- increase in SRAS
What is long run growth caused by?
- shift in LRAS because of quality, quantity and productivity increase
Economically inactive definition
Those of working age who are not in work and not looking for work
Definition of trend growth
The rate of growth in LRAS over time, representing the maximum potential capacity of the UK economy
What will increase long run economic growth?
Anything that shifts LRAS
- education
- increasing retirement age
- technology
What can the costs and benefits of economic growth be considered in terms of?
- effects on individuals
- effects on economies
- effects on the environment
Benefits of economic growth
- Improvement in living standards
- more jobs
- The accelerator affects of growth on capital investment
- Creates business confidence
- improvement in services
- Environmental benefits
Why do living standards improve due to economic growth?
Increase in income per capita, means more disposable income which equals consumption in vital needs
Why will there be more jobs due to economic growth?
Growth in the economy means a higher need for workers to employ
Why is there the accelerator affect when there is economic growth?
Firms spend more on investment because national income increases due to economic growth. Firms spend in order to expand the capacity to exploit the rising income
Why will services improve due to economic growth?
A growing economy boosts tax revenues and generates money to finance spending in public goods and services without having to raise tax rates
