3.1.2 Economic Growth Causes Flashcards
Who is primarily responsible for economic growth in the United States? (According to Ronald Regan)
Entrepreneurs and their small enterprises
This highlights the role of small businesses in driving economic expansion.
What is short-run economic growth also known as?
Actual growth
What can cause short-run economic growth?
An increase in AD or SRAS
Which of the following is most likely to cause an increase in aggregate demand in the short run?
A) A rise in interest rates
B) An increase in government spending
C) A fall in consumer confidence
D) A decrease in the money supply
B) An increase in government spending
Short-run economic growth can occur when aggregate demand increases. Which of the following components of AD is not included in the calculation of aggregate demand?
A) Government spending
B) Investment
C) Exports
D) Savings
D) Savings
Which of the following is most likely to shift the short-run aggregate supply curve to the right?
A) An increase in the cost of raw materials
B) A reduction in corporate taxes
C) A rise in nominal wages
D) A depreciation of the domestic currency
B) A reduction in corporate taxes
In the context of AD and SRAS, what is the most likely outcome if there is an increase in investment spending by firms?
A) A leftward shift in the AD curve
B) A rightward shift in the AD curve
C) A leftward shift in the SRAS curve
D) A decrease in potential output in the long run
B) A rightward shift in the AD curve
What does an increase in aggregate demand cause in terms of national output?
An expansion of aggregate supply and a higher equilibrium level of national output
What is long-run economic growth also known as?
Potential growth
How i long-run economic growth represented on a diagram?
An increase in LRAS
What visual representation is used to demonstrate economic growth?
AD-AS Diagrams
How is a rise in a country’s productive potential shown in an AD-AS diagram?
An outward shift of long run aggregate supply (LAS)
What percentage of China’s Real GDP growth since 1979 has come from increasing capital and labour inputs?
60-70%
What percentage of China’s Real GDP growth has come from rising factor productivity?
30-40%
What are the key factors contributing to China’s economic growth?
- Increasing capital investment spending
- Rising factor productivity
- Improving human capital
- Improving allocative efficiency
- Productivity-enhancing effects of innovation
What challenges does China face in its economic transition?
- More reliance on domestic market
- Raise consumption and reduce inefficient savings
- Grow the private sector
- Increase the pace of innovation
- Continue to integrate into the global economy
What has contributed to rapid economic growth in many African countries?
- Improvement in the terms of trade
- Improved governance
- Strongly increasing foreign direct investment
- Increasing intra-regional trade
- Improved macroeconomic management
- Rising per capita incomes
What is a significant factor in the economic growth of Africa?
Diversification of the economy away from primary commodities
What is the impact of Brexit on UK economic growth?
Varied impacts including potential trade disruptions and changes in investment patterns
What has been a major impact of COVID-19 on world economic growth?
Significant economic slowdown and disruptions in global supply chains
Fill in the blank: Economic growth can be defined as an increase in _______.
[real GDP]
True or False: Long-run economic growth can only be caused by an increase in aggregate demand.
False
Why may SRAS shift outwards
Supply-side shocks that lower the costs of production for firms
Using the diffrent components of AD how can they lead growth?
-Consumer-led growth
-Investment-led growth
- Government spending-led growth
- Export-led growth
List the kay factors effecting Short run economic growth.
Draw a digram where a shift in AD leads to economic growth
Draw a digram where a shift in SRAS leads to economic growth
Give examples of capital leading to long run economic growth
-R & D
- New tech
- Investments
Give examples of Enterprise leading to long run economic growth
-Competition
- R&D
-Tax insensitives
Give explaeas of how Lbour can contribute to long run economic growth
-education and skills
-Greater labour market participation ( inactive ->active)
-Immigration
-Changes in demography
Give examples of how Land can contribute towards long run economic growth
- More environment regulation
- transport tech
-architectural innovative
What are some factors effecting economic growth
Draw an outwards shift in LRAS on the classical model caused by an outwards shift in AS and AD
A rise in a country’s productive potential is shown by an outward shift of ____ _____ ______ ____ .
This means a higher level of ____ _____ can be met because of an increase in the supply _____.
A rise in a country’s productive potential is shown by an outward shift of long run aggregate supply (i.e. LAS1 to LAS2)
This means a higher level of aggregate demand can be met because of an increase in the supply capacity
A rise in a country’s productive potential is shown by an outward shift of ____ _____ ______ ____ .
This means a higher level of ____ _____ can be met because of an increase in the supply _____.
A rise in a country’s productive potential is shown by an outward shift of long run aggregate supply (i.e. LAS1 to LAS2)
This means a higher level of aggregate demand can be met because of an increase in the supply capacity
