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AP Economics > Economic Growth > Flashcards

Economic Growth Flashcards

1
Q

What are the 2 ways economic Growth is defined?

A

An increase in real GDP occurring over a period of time

An increase in real GDP per capita occurring over a period of time

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2
Q

What does an increase in real GDP measure?

A

Military and political preeminence

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3
Q

What does an increase in real GDP per capita measure?

A

Standard of living

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4
Q

What institutional structures promote growth?

A

Property rights, patents/copyrights, effiecient financial institutions, literacy/education, free trade, and competitive markets

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5
Q

Real per capita GDP is also called

A

Standard of living

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6
Q

A growing economy is better able to deal with

A

Poverty through social programs

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7
Q

Growth does what regarding scarcity?

A

It lessons the burden of scarcity

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8
Q

What causes an economy to grow?

A

Adding any production or technology factors to an economy

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9
Q

On a PPC curve, the curve shifting right or left is caused by

A

Supply factors

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10
Q

Movement from points on the curve is caused by

A

Demand it efficiency factors

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11
Q

FOP=

A

Factors of production(supply factors)

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12
Q

If any economy hasn’t reached its potential growth what can it do?

A

Increase AD sufficiently to sustain full employment

Or

Efficiently use additional resources to maximize output

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13
Q

What does economic growth do??

A

Examines what expands an economy and analyzes public policies designed to increase economic growth

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14
Q

What are the 6 “ingredients of growth”?

A
  1. Quality/quantity of natural resources
  2. Increased quality/ quantity of labor
  3. Increase in capital goods
  4. Technology improvement
  5. Full-employment of resources
  6. Productive and allocative efficiency
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15
Q

What are supply factors?

A

They relate to the physicals ability of the economy to expand

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16
Q

What are the 4 supply factors?

A

Natural resources, labor, capital goods, technology

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17
Q

What are demand factors?

A

They relate to realizing potential growth

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18
Q

What demand factor relates to growth?

A

Full employment of resources

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19
Q

How can full employment of resources be achieved?

A

With a growing level of AD

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20
Q

What are effieciency factors?

A

Related to realizing economic efficiency

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21
Q

What is productive efficiency?

A

Least costly(min ATC)

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22
Q

What is allocative efficiency?

A

Society’s optimal way aka. Full employment(MC)

23
Q

What does a nations real GDP depend on?

A

The input of labor and labor productivity

24
Q

How can you calculate real GDP?

A

Worker hours times output per worker

25
Q

What is the labor participation rate?

A

The percentage of the working age population in the labor force

26
Q

What does it mean to be in the labor force?

A

Actively seeking employment, and willing and able to work

27
Q

What are labor inputs?

A

The size of the work force and the average hours of work

28
Q

What is labor productivity?

A

Technological advances, quantity of capital, education/training, allocative efficiency

29
Q

What is the anti-growth view?

A

Critics of economic growth say that industrialization and growth cause problems

30
Q

What problems do anti-growth viewers see with economics growth?

A

Pollution/environment problems, during times of growth the government doesn’t try to fix poverty, homelessness, or discrimination

31
Q

Graphically what happens during economic growth??

A

LRAS and SRAS increase and AD shifts to the right

32
Q

What is the annual growth rate in the US since 1948?

A

3.1%

33
Q

What has the real GDP per capita gain been since 1948?

A

2%

34
Q

What is hidden about economic growth?

A

Improved products and services, added leisure time, environmental effects, and international comparisons

35
Q

Improvement in products and services is used to measure

A

Well-being

36
Q

Compared to other countries the US grows

A

Slower but we are much bigger

37
Q

What policy demand wise does the government take to grow the economy?

A

Fiscal/monetary policy to increase GDP and reduce unemployment

38
Q

What does the government do supply wise to grow the economy?

A

Education/training polices, tax polices

39
Q

What is a deficit?

A

Spending more than you make

40
Q

What is a debt?

A

An accumulation of all past debts

41
Q

What is a budget deficit??

A

How much the government spends more than they make

42
Q

What is public/national debt?

A

The accumulation of all last deficits and surpluses of the US governments

43
Q

Most state governments are required to do what with their budgets?

A

Have a balanced budget

44
Q

What is an annually balanced budget?

A

It is pro-cyclical and doesn’t fix inflation or recession

45
Q

What does it mean to be pro cyclical?

A

Working in accordance to the business cycle

46
Q

What is a cyclically balanced budget?

A

It is counter cyclical; it fixes economic issues like inflation and recession

47
Q

In the recessionary phase under a cyclically balanced budget what would the government do?

A

Lower taxes and increase spending which cause a deficit

48
Q

During prosperity under a cyclically balanced budget the government would do what?

A

Raise taxes, increase spending, and use the surplus to lay off the debt accumulated during the recession

49
Q

What is the problem with a cyclically balanced budget?

A

The phases aren’t equal magnitude earthquake

50
Q

What is functional finance?

A

Federal finance that provides for non-inflationary full employment should be the main concern

51
Q

What is our US national debt?

A

19 trillion

52
Q

What has caused such a large debt for the US?

A

Wars/defense spending, recessions, tax cuts, lack of political will

53
Q

Why should we fear our large debt?

A

Foreign ownership of debt, and the government’s debt often causes the crowding out effect to occur

54
Q

Why shouldn’t we fear our large national debt?

A

The relative size of the debt is less than it was in 1950, compare for other countries we have a small debt, we gain interest from the national debt, the US governments owns most of the debt

AP Economics (19 decks)

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