ECONOMIC GROWTH

Question 1

GDP

Answer 1

Gross Domestic Product

Question 2

ECONOMIC GROWTH CALCULATION

Answer 2

CHANGE IN GDP / ORIGINAL GDP x 100

Question 3

GDP PER CAPITA

Answer 3

This is the average national output per person

Question 4

GDP PER CAPITA CALCULATION

Answer 4

TOTAL GDP / POPULATION

Question 5

BENEFITS OF ECONOMIC GROWTH

Answer 5

➢Increases the demand for labour, lower unemployment and higher incomes
➢Rise in the standard of living
➢Firms are more likely to perform well, higher profits meaning more innovation
➢Can improve balance of payments because more exports will be sold
➢Improves the governments fiscal position
➢Environmental benefits

Question 6

COSTS OF ECONOMIC GROWTH

Answer 6

➢Income inequality
➢Government tend to spend more, leading to a potential budget deficit
➢Potential deficit in the balance of payments due to more imports
➢Finite resources used up
➢Negative externalities from industrialization

Question 7

BENEFITS OF A RECESSION

Answer 7

➢Causes firms to become more efficient as they need to lower costs as much as possible

Question 8

LONG RUN ECONOMIC GROWTH

Answer 8

Usually the result of supply side factors and increasing the productive potential of the economy.
Happens through;
➢Innovation
➢Investment in modern machinery
➢Raising agricultural output
➢Spending on education etc, improving human capital
➢Increasing population

Question 9

GROSS NATIONAL PRODUCT (GNP)

Answer 9

The total value of goods produced and services provided by a country during one year, equal to the gross domestic product + the net income from foreign investments.

Question 10

GROSS NATIONAL INCOME (GNI)

Answer 10

Gross National Income (GNI) is the total amount of money earned by a nation’s people and businesses.

Question 11

NOMINAL INCOME

Answer 11

A level of income that has not been adjusted to inflation

Question 12

REAL INCOME

Answer 12

A level of income that has been adjusted to inflation

Question 13

NATIONAL WELL BEING

Answer 13

National well-being is focused on measuring how people in the UK are doing as individuals, as communities, and as a nation.
➢Usually measured on a scale of ten.

Question 13

PURCHASING POWER PARITY

Answer 13

This is used when comparing living standards
➢Uses GDP per capita to compare
➢Usually compared between countries with different currencies as exchange rates may not give an accurate picture
➢Purchasing power shows the real value of money. For example, A pound has much less value in the UK then compared to A pound in Thailand