Econ growth explanations

Question 1

neg output

Answer 1

economy in recession
high unemployment and disinflation

Question 2

boom/peak

Answer 2

gap growing fast, unemployment likely to be low, consumer spending is high
inflationary pressurs due to expanding AD. firms increase investment to cope with demand

Question 3

recessions/slowdowns

Answer 3

gap falling, unemployment rising. consumer and investment spending slowing down and inflationary pressure falling

Question 4

In a boom

Answer 4

High rates econ growth
Low unemployment
Demand pull inflationary pressures
High consumer and business confidence
Improving gov budget balance

Question 5

In trough

Answer 5

Neg rates econ growth
High rates unemployment
Low rates of inflation
Low business consumer confidence
Worsening gov budget balance

Question 6

Land

Answer 6

Natural resources
Economy with abundance of these can grow steadily as they trade

Question 7

Labour

Answer 7

Increasing number workers lead to econ growth and achieved
- changes in demographic
-increases participation rates
- Immigration policies

Increasing size of labour force can increase output but increasing quality more important in long run . Workers made more productive by education and training = to cope with demands of existing capital stock, to be flexible, to contribute to change

Question 8

Capital

Answer 8

Stock needs to increase over time if econ growth to be sustained
Means sustained investment in economy

Question 9

Technological progress

Answer 9

Increases econ growth
- cuts avg cost of production of product
- creates new products for market

Question 10

Technological progress

Answer 10

Increases econ growth
- cuts avg cost of production of product
- creates new products for market

Question 11

Benefits of econ growth

Answer 11

Higher standards of living
Increased revenues and profits for firms
Increased employment opportunities
Improvement in gov budget balance
Decrease in absolute poverty rates
Increase consumer and business confidence- more investment
Improvement in environment as more efficient cleaner tech developed

Question 12

costs Econ growth

Answer 12

neg impact on environ , nonrenewable resources used u, neg prod externalities created

opportunity costs growth - to produce more capital goods have to forego prod consumer goods

increase relative poverty and income inequality

worsened trade balance, consumers purchase more imports

macro economic instability, high inflation= boom + bust cycles

Question 13

3 costs Econ growth

Answer 13

risks of higher inflation
environmental effects
inequaliites of income and wealth