Economic Growth Flashcards
What is economic growth?
It refers to the sustained increase in the output of goods and services in an economy over time. It is measured by the growth in real GDP or real GNP. It is adjusted for inflation over a certain time, typically annually or quarterly.
What does it indicate?
It indicates can economic ability to produce more and better goods and services, which generally improve the standard of living and wealth within a society.
What are the type of economic growth?
Nominal- refers to the increase in GDP measured at current pricing without adjusting for inflation.
Real- adjusts for inflation, thus reflecting the true increase in output or income by using current prices.
What does positive growth indicate?
A positive growth rate indicates an expanding economy, whereas a negative growth rate signals a recession.
Factors contributing to economic growth?
Investments in physical capital and human capital- enhances productivity leading to economic growth.
Technological advances- more efficient production
Increase the amount of Human Resources- quality must be good, therefore human capital is crucial
Trade and globalisation- expanding the trading internationally. Greater specialisation, drives competition, promotes exchange of technology and ideas.
Benefits of economic growth?
Higher living standards- improves income, employment, and the availability of goods and services.
Job creations- more businesses and higher demand for labour.
Increased government taxes- higher quality public services like education, healthcare, and infrastructure.
Challenges to economic growth?
Income quality- job specialisation more prominent social classes.
Environmental impacts- over exploitation of nature resources, needing it to be sustainable.
Inflationary pressures- grow is too rapid and demand outpaces supply, it can lead to inflation which could destabilise the economy.
How can economic growth be shown?
It can be shown on a ppc graph. Production possibilities curve by outward shifting.
