Economic Growth Flashcards
What is Economic Growth?
An increase in the productive potential of a country, increase in the value of all G + S produced in a country over a period of time.
Real GDP
GDP that takes inflation into account
Actual growth:
Actual level of production in an economy
Potential growth:
Maximum growth rate if all the resources in a country are employed efficiently
Forecast growth:
Predicted / estimated growth
GDP equasion
GDP=AD=Income=C+I+G+X-M
How can economic growth be achieved?
Through an increase in the quality or quantity of the FoP (Factors of Production)
What is Development?
An improvement in the living standard of humans. Qualitative improvement, well-being, welfare (vs. quantitative growth of the economy)
Measures of Development:
- HDI
- GDP per capita
- economics of happiness
- IWI
- GHI
- HPI
Happy Planet Index (HPI)
unites wellbeing, life expectancy, inequality and ecological footprints.
Social Progress Index
Personal rights, personal freedom and choice, tolerance and inclusion and access to advanced education.
Human Development Index (HDI)
life expectancy, expected years of schooling and Gross National Income per capita for standard of living.
Intensive growth
- increases productivity and improves efficiency
- governments can influence this by:
training programs
supporting expenditure for research, development and innovation
Extensive growth
- produces more capital
- Governments can influence this by:
changing laws
public investment
lowering interest rates
Benefits of growth
- higher life expectancy
- consumption and access to G + S rise
- housing standards rise
- access to education increases
- better health
