Economic Growth and Development Flashcards
What is economic growth
An increase in the capacity of the economy to produce more goods and services
What is economic development
The increase in the number of goods and services produced within a country
How does economic growth relate to economic development (4)
More jobs created
More people receiving income
Standard of living will improve
You need economic growth for economic development to take place but it does not guarantee it
What are the 5 factors necessary for economic growth
Improved technology
Increased productivity
Increase in factors of production
Effective government policy and efficient administration
Investment
What does the demand-side approach do
Emphasizes that for a country to have growth, aggregate demand needs to be increased by making changes to monetary and fiscal policies
Who drives the Monetary Policy
SARB
Who drives the Fiscal Policy
The Department of finance
What are the 4 Monetary Policy instruments
Interest Rate Changes
Open Market Transactions
Moral Suasion
Cash Reserve Requirements
What are the 7 Fiscal Policy instruments
Progressive personal income tax
Wealth Taxes
Cash Benefits
Benefits in kind
Other redistribution
Land restitution and redistribution
Subsidies on properties
What are supply-side measures
Anything that influences the supply of goods or resources
How does the South African government use Supply-side measures
To complement or in addition to the demand-side approach
What are the 3 parts of the the South African approach
Effectiveness and efficiency of markets
Business efficiency
Cost of doing business
What are the 4 aspects of effectiveness and efficiency of markets
Effectiveness
Efficiency
Competition
Deregulation
Read Pages 72 - 74
What is Pareto Efficiency
Given the constraints of the effectiveness parameters, it is not possible to change the allocation of resources in a way that someone is better off without making someone else worse off
