Economic preformance

Question 1

SR econ growth

Answer 1

growth based on increased utilisation of unemplpoyed resources = increased overall output.
AKA actual growth
- measured by % change in GDP

Question 2

LR econ growth

Answer 2

comes from increases in LRAS, growth based on increasing the potential output level of econ.

Question 3

Determinants of SR growth

Answer 3

• increase in AD
• increase in SRAS

Question 4

Determinants of LR growth

Increases in labour force (labour supply)

Answer 4

• Increases in immigration
• Increasing retirement age
• Encouraging people to enter work force
• Making it financially attractive to be out of work by: paying less benefits, increasing incentives to take up work.

Question 5

Determinants of LR growth

Improvements in labour productivity

Answer 5

• improving workforces skills
• increases in training undertaken should boost growth.

Question 6

Determinants of LR growth

Capital investment

Answer 6

= enables people to produce more output
* gov encourage businesses to invest by:create more stable econ climate, tax incentives.

Question 7

Determinants of LR growth

New technology

Answer 7

= productivity improvements for capital equiptment.
= they raise ability of econ to produce more output with given capital stock.

Question 8

Determinants of LR growth

Education

Answer 8

improvements in schools + unis = improvements in worker productivity.
* occupational immobilty can be reduced by ensuring education prepares pupils for future.

Question 9

Determinants of LR growth

Gov policy

Answer 9

= through supply side policies.

Question 10

Benefits

Answer 10

• higher living standards
• eaiser to find jobs
• improved social indicators
• increased tax rev
• reduced welfare expenditure
• lower absolute poverty
• greater international status

Question 11

Costs

Answer 11

• increased inflation if SR rises to quickly
• depletion of natural resources
• possibly increases in equality
• increased negative externalities

Question 12

sustainable growth definition

Answer 12

= econ growth that doesn’t comprimise the abilty to grow in the future.

Question 13

sustainability of growth + example

Answer 13

= can be maintained in LR and doesn’t reply on non-renewable resources to generate.
* govs been encouraged to intervene and shift production towards this e.g. propsosed ban of petrol cars by 2050

Question 14

Economic cycle

Definition

Answer 14

repeated pattern of flucuations in SR growth and how it differs from trend of growth in economy.

Question 15

Economic cycle

Boom

Answer 15

• SR growth above trend growth rate
• consumer confidence and spending high, plus credit rising quickly.
• business confidence = investment
• low unemployment
• gov finances more towards surplus
• inflation rises

Question 16

economic cycle

downturn

Answer 16

• SR growth rate falls
• consumers reduce consumption financed by borrowing
• bussiness confidence + investment falls
• unemployemnt stops falling
• inflation likely to stop rising
• tax rev may begin to fall
• spending on imports falls

Question 17

economic cycle

recession

Answer 17

• econ growth = negative
• consumer spending falls
• business confidence low
• unemployment rising
• inflation falls, deflation possible
• budget deficit likely to be high
• CA balance may more into surplus due to low imports demand

Question 18

recovery

Answer 18

• ST growth positive but below trend growth
• confidence for all begins to rise
• inflation remainds low
• unemployment likely to remain high but stop rising
• CA balence liekly to remain in surplus.

Question 19

output gaps definition

Answer 19

differnce between actual growth and trend growth