3Y: Economic Indicators - Economic Growth

Question 1

What is Economic Growth?

Answer 1

Economic Growth occurs when there is an increase in the amount of goods and services produced in an economy from one year to the next.

Question 2

How do you calculate the rate of economic growth?

Answer 2

Difference between Year1 and Year2 x 100

Production in Year1

Question 3

What is the Economic Cycle?

Answer 3

The economic cycle is the term used to describe the way in which the level of economic activity changes over time.

Question 4

When does Economic Growth occur?

Answer 4

Economic growth occurs when the amount of goods and services produced in the economy increases from one year to the next.

Question 5

What is an Economic Boom?

Answer 5

A continous period of rapid economic growth.

Question 6

What is a Recession?

Answer 6

A recession represents a general slowdown in the level of economic activity.

Officially, an economy that experiences negative economic growth for two consecutive quarters (6 months in a row) is said to be in recession.

Question 7

What is an Economic Depression?

Answer 7

An economic depression occurs when a recession is very severe and continues for a sustained period of time.

Question 8

Review Economic Growth in Ireland:

Answer 8

• Was high and remained so until 2007.
• Declined sharply as th recession began in 2008 and remained negative until 2010.
• Increased at a slow pace until 2013.
• Was much stronger in 2014.
• Continued strengthening in 2015.

Question 9

What are the effects of Economic Growth on Households? (2)

Answer 9

1. Increased employment and increased standard of living.
2. More disposable income.

Question 10

What are the effects of Economic Growth on Businesses? (2)

Answer 10

• Multiplier effect: More money increases demand and encourages production. This will lead to increased employment which will lead to increased demand.
• Rise in government income: If government collect more taxes, it will run a budget surplus that could allow tax cuts, which has a positive effect on business.

Question 11

What are the effects of Economic Growth on the Economy? (3)

Answer 11

1. Strong Economic Growth & Inflation. When economy grows rapidly, resources become scarce and causes prices to rise.
2. Increase in employment.
3. Rise in government income which means more money to spend on services e.g education.

Question 12

What are the effects of Low Economic Growth on the Economy? (2)

Answer 12

1. Demand for goods fall. Possible business closures and job losses.
2. Investment in business opportunities reduces.

Question 13

What was the Troika?

Answer 13

The troika is a term used, especially in the media, to refer to the decision group formed by:

1. the European Commission (EC),
2. the European Central Bank (ECB),
3. and the International Monetary Fund (IMF).