Economic Growth Flashcards
What is Economic Growth?
Annual rate of increase in the total production or income in the economy.
Name some problems with GDP
- Non-market production
- Unrecorded activity
- Data revisions
- Economic welfare
What is a business cycle?
The pattern of upswing and downswing that can be seen in the economic activity over a number of years.
Name three business cycle indicators
- leading indicators
- coincident indicators
- lagging indicators
What is a leading indicator?
They predict future economic activity
Coincident indicators
They move simultaneously with the economy
Lagging indicators
Change after the economy has begun to follow a particular pattern or trend
Capital widening
When capital stock is increased to accommodate an increasing labor force.
Capital deepening
When the amount of capital per worker is increased (when the growth in capital stock is greater than the growth in number of workers)
Classical approach
believe that market economies are inherently stable and government should not interfere.
Keynesian approach
believe that the government have a duty to intervene
Structuralists approach
believe changes come as a result of institutional or structural changes
Domestic Demand
the total amount of money spent on goods and services by the people, companies, and government within a particular country.
Inward industrialization
a strategy aimed at meeting wants of growing poor population.
Import substitution
reduce imports by choosing to produce the goods in our own currently.
