Growth

Question 1

Short term growth

Answer 1

Output (GDP) increases

Question 2

Long term growth

Answer 2

increase in the productive potential of an economy

Question 3

Recession

Answer 3

Two consecutive quarters of negative growth

Question 4

Sustainable growth

Answer 4

Growth rate which can be maintained without creating other significant economic problems

Question 5

GNP

Answer 5

Gross national product-taking into account property income from abroad

Question 6

Excessive growth

Answer 6

Goods and services inflation, House Price Inflation

Question 7

Advantages of Growth (3)

Answer 7

Higher GDP per capita
More public in merit goods
More employment

Question 8

Disadvantages of Growth (2)

Answer 8

Inflation and worsening of BoP

Widening income gap

Question 9

Limitation of GDP per capita over time

Answer 9

Distibution of income, accounts for reparation of damage, negative externalities

Question 10

What should growth be

Answer 10

Sustainable, inclusive and balanced

Question 11

Extreme poverty

Answer 11

Below $1.90 PPP a day

Question 12

People in China lifted out of poverty

Answer 12

750 million due to three decades of rapid economic growth

Question 13

Quatar’s wealth compared to HDI

Answer 13

Wealthiest country in the world but only 38th on the HDI score

Question 14

Role of GDP in boosting growth

Answer 14

Higher GDP - more capital savings - money available for investment, buffer and to lift people out of poverty - higher investment ratio (only 19%/GDP in the UK) - improvements in LRAS (quantity and quality of FoP) - improve long run trend rate

Question 15

What does the Harrod Domar Growth Model emphasize

Answer 15

Role of Savings

Savings=Investment

Question 16

role of savings

Answer 16

• expansion in net investment
• growing capital stock
• virtuous cycle and multiplier effect

Question 17

Which countries have high levels of savings

Answer 17

India and Indonesia

Question 18

Chain of analysis Harrod Domar

Answer 18

People save more money (marginal prop. to save)
Banks have more liquidity
Banks lend more 
Firms can borrow more 
Investment increases

Question 19

What does LDC-government stand for

Answer 19

Least Developed Country

Question 20

Capital output ratio

Answer 20

The amount of capital needed to produce one unit of output

Question 21

Amartya Sen

Answer 21

Development being concerned with improving the freedoms and capabilities of the disadvantaged

Question 22

Solow Growth model

Answer 22

Catch up growth