Economic Growth Flashcards
Economic growth definition:
A percentage increase of real output of an economy over a period of time
Output definition:
The value of all goods an services produced in a country. A country produces different goods/services so to measure it we take the value of it.
National Income
How much money the country has earned from producing their output. National income is expressed as Gross DOmestic Product (GDP)
GDP per capita (average gdp per citizen) formula
Total GDP (can be nominal or real GDP) / population = GDP per capita
uses of GDP stats (3)
1) Helps govt. create policies/make desicions on allocation of resources (mixed economy only)
2) Enables to compare countries in terms of SOL
3) Enables to compare state of the economy over a period of years
economic growth definition:
A % increase in the real GDP of an economy
growth of economies (5)
1) The discovery of more natural resources
2) Investment in captial and infrastructure
3) Technical progress
4) Increasing amount and quality of human resources
5) Reallocating resources
recession definition
When GDP decreases for 2 consecutive quarters (6 months)
Depression definition
When GDP decreases for serveral years in a row
Recovery definition
When the economy is recovering from a recession or depression
Economic boom definition
High economic growth, this is not sustainable because of rising prices/wages. The boom ends with the peak
Calculating GDP via expenditure method:
C + I + G + (X - M)
Aggregate demand definition
The total demand for all goods and services produced in an economy (at a certain general price level)
