Economic Growth

Question 1

What is economic growth ?

Answer 1

The rate of change in real GDP from one year to the next

Question 2

How is economic growth calculated

Answer 2

By taking the difference between current year GDP and previous year GDP and dividing it by the previous year GDP

X100 will give you the percentage

Question 3

What is long run economic growth ?

Answer 3

The process by which rising productivity increases the standard of living

Question 4

How is long run economic growth measured

Answer 4

GDP per capita.

Question 5

What drives increases in economic growth ?

Answer 5

Labour productivity

Question 6

Define labour productivity

Answer 6

The quantity of goods and services produced by one worker, or by one hour of work

Question 7

What are the 2 factors that determine the level of labour productivity

Answer 7

1. Increases in capital per hour worked
2. Technological change

Question 8

What are the 2 production factors that influence increases in capital per hour worked

Answer 8

1. Capital manufactured goods: goods that are used to produce other goods
2. Human capital: the accumulated knowledge and skills that workers acquire from education and training, or from life experiences

Question 9

What is technological change ?

Answer 9

Technological change is the ability of firms to produce output with a given quantity of inputs

accumulating more inputs, will not ensure that an economy experiences economic growth, unless changes occur

Question 10

If Australia’s economic growth rate is slower relative to other countries’ economic growth rates, this will:

Answer 10

shift the aggregate demand curve to the right.

Question 11

The short-run aggregate supply curve has a ________ slope because as prices of ________ rise, prices of ________ rise more slowly.

Answer 11

positive; final goods and services; inputs