Lesson 8 - Economic Growth Flashcards
1
Q
What is short run growth?
A
- demand side growth
- using up spare capacity
2
Q
What is long run growth?
A
- increasing the productive potential of an economy
- supply side
- increasing Q2 CELL
3
Q
What are the short run causes of economic growth?
A
- consumption
- investment
- government spending
- net exports (increase)
4
Q
Name 3 long run causes of economic growth
A
- investment
- new technology
- training/education
5
Q
What does a negative output gap suggest?
A
The economy is working below its productive potential
6
Q
What does a positive output gap suggest?
A
The economy is working above its productive potential
7
Q
Name 4 causes of the economic cycle
A
- economic shocks
- fluctuations in AD
- speculative bubbles (when prices get above their real value the bubble bursts and people stop spending)
- the multiplier/accelerator effect
8
Q
Give 3 benefits of economic growth
A
- rising living standards
- less poverty
- fiscal dividends (increase in tax revenues)
9
Q
Give 3 costs of economic growth
A
- pollution
- urbanisation
- winners and losers (some countries have good growth while others struggle)
- non renewables
