chapter 7 Flashcards
Sustainable Economic Growth definition
sustained and stable economic growth without creating other significant economic problems (harming the environment)
Inclusive Economic Growth definition
economic growth that creates opportunity for all segments of the population & distributes the benefits of increased prosperity, both in monetary & non-monetary terms, fairly across society
Economic Growth definition
increase in the real national output of a country over a given period of time
Actual vs Potential Economic Growth
actual
- increase in real national output
- increase in equilibrium national output
- increase in AD / SRAS
- outward shift of a point in ppc graph
potential
- increase in capacity of the economy
- increase in full-employment output (Yf)
- increase in LRAS
- outward shift of ppc curve on the ppc graph
Sustainable Economic Growth analysis
- sustained increase in real national output
- environmental & resource sustainability
Inclusive Economic Growth analysis
- everyone has an opportunity to participate in the growth process
- the benefits of growth are shared equitably
Economic Growth rate formula
[ (real GDP of year 1 - real GDP of year 0) / (real GDP of year 0) ] x 100
Demand-Side Factors of Economic Growth
- increase in AD
Supply-side factors of Economic Growth
- increase in SRAS
- increase in LRAS
Institutional & Structural Factors of Economic Growth
- cultural environment
- social environment
- political environment
Consequences of Economic growth
- may not be inclusive and widen the income inequailty
Benefits of Economic Growth
- lower inflation
- lower unemployment rates
- higher SOL
Economic Recession definition
a sustained period of negative economic growth
Technical Recession definition
2 consecutive quarters of negative economic growth
Problems of Recession
- loss of output level and SOL
- increased unemployment
- strain on government budgets
- negative outlook & pssimism
- may cause deflationary spiral
