Economic Growth Flashcards
How is it measured and what is it
Via changes in real GDP
Total output of goods and services in the economy divided by total population
What causes long run growth
Increasing as/ potential output
What causes short run growth
Increasing as or actual output
What are however points for economic growth
1) population size (gdp per capita)
2) type- consumer or capital
3) quality of life- working hours
4) black markets
What is the output method
All produced output from all sectors
What is the expenditure method
All money spent on domestic goods
What is the income method
All income recieved by producers
What is a problem with the output method
Double counting
What is a problem with the expenditure method
Must exclude imports, tax, subsidies
What is a problem with the income method
It must exclude transfer payments
What are the costs of rapid economic growth
Opportunity cost,
sustainability- use non renewable resources,
Inflation
What are the benefits of growth
Lower unemployment, targeted growth reduces poverty, better living standards (if per capita increases)
