Economic growth

Question 1

Define economic growth

Answer 1

Increase the volume of output over time. Measured by an increase in real* GDP.
*effects of inflation not counted for

Question 2

Define actual growth.

Answer 2

Economic growth as a result of using existing resources more fully/efficiently. Caused by increasing AD, causing an extension along the AS curve.
Short term growth; and increase within the PPF
Can be growth with inflation.

Question 3

Define potential growth.

Answer 3

Economic growth due to the increase of quantity and quality (or the productivity) of the factors of production. Caused by an increase in LRAS.
Shift the curve of the PPF outwards.
Can get growth without inflation.

Question 4

Benefits of economic growth

Answer 4

Improvements in living standards - higher GNI/GDP per capita and reduce absolute poverty
Reduce unemployment
Encourages more investment
Boosts tax revenue, which could then help the gov. Reduce the budget deficit/pay back debt
Increase in exports

Question 5

Disadvantages of economic growth

Answer 5

Environmental concerns: negative externalities, increase in household/industrial waste and the consumption of de-merit goods
Structural inequality: urban-rural divide
Increasing income inequality