Economic Growth Flashcards
What is economic growth
an increase in the capacity of an economy to produce goods and services
why does economic growth occur
due to an increase in the quantity of resources or an improvement in their quality
what is the main economic objective and how does growth fulfil it
when economies produce more g+s it enables higher standing of living which the main goal
to do with op cost: what do u trade off when it comes to economic growth
you trade off present consumption or future consumption
explain the trade off both ways
because if more resources are used now than there is less consumption for the future
but if there is less current consumption there will be more future resources for capital
what happens if we reduce current consumption
increases saving which can be channeled into investment (creation of capital goods like machines)
what are consumption goods
resources used to produce consumer goods
what are capital goods
goods used to produce mroe for the future
How does show on a PPF
produce more consumption goods = lower rate of economic growth
produce more capital goods = faster rate of economic growth
