Economic Growth Flashcards
What does TIGEER stand for?
Trade
Inflation
Economic growth
Employment / Unemployment
Environment
Redistribution of income
What’s the circular flow of income
An economic model showing how money flows through the economy, between firms and consumers
What are the leakages in the circular flow of income?
Savings
Taxation
Imports
What are the injections in the circular flow of income?
Investment
Govt. Spending
Exports
What’s gross domestic product?
The monetary value of all goods and services produced in an economy in a certain time period
What are the pros of measuring GDP?
Measures economic growth
Measure of living standards
What are the cons of measuring GDP?
The ONS are double counting
The shadow economy
It’s hard to measure the service industry
Potential errors in data collection
What’s economic growth?
An increase in real GDP in an economy in a year
What’s short run economic growth?
Where we stimulate the components of aggregate demand.
What’s long run economic growth?
Where we improve the productive potential of an economy
What’s aggregate demand?
The real planned expenditure on goods and services within an economy
What are the components of aggregate demand?
AD = C + I + GS + (X - M)
How is short run economic growth increased?
Lower interest rates
Lower income/corporation tax
Higher confidence
Higher government spending
Weaker exchange rate
How is long run economic growth increased.
Increased Q2CELL
Increased productive efficiency
What’s the economic cycle?
Fluctuations in real GDP that an economy goes through over time
What’s a boom?
Positive economic growth, measured by real GDP, where we have a positive output gap but the economy could be overheating
What’s a recession?
Negative growth over two consecutive quarters
What’s a slump?
Where there’s a large fall in real GDP, creating a negative output gap, with fear of deflation or depression
What’s a recovery?
Where real GDP starts to grow, showing positive signs for the economy
What are the positives of economic growth?
Higher disposable income
Higher employment
Higher profits for firms
Increased tax revenues for the Government (fiscal dividends)
What are the negatives of economic growth?
Demand pull inflation
Income inequality
Environmental costs
Current account defecit
What are the evaluations of economic growth?
Is growth sustainable?
Is growth inclusive?
Is growth balanced?
There’s a role for the private sector and the government.
What’s the definition of unemployment?
People who are willing and able to work and actively seeking work but don’t currently have a job.
What does the labour force survey (LFS) measure?
People who are employed, unemployed and economically inactive
