Macro 4.1 Economic Growth Flashcards
What is long run economic growth
The expansion of the productive capacity of an economy
What is short run economic growth
An increase in RGDP
The what causes short run growth
Anything that increases AD
3 factors that cause long run growth
QQP
Quantity (workforce increase)
Quality (infrastructure/competition/better resources)
Productive efficiency
List the 4 measures of economic growth
RGDP
GPD per capita
GNI
Green measure
How is RGDP measured as a measure of growth
Income = output = expenditure
What are the cons of using GDP/RGDP as a measure of growth
Double counting
Informal activity
Errors
Income inequality
Other quality of life aspects
How is GDP per capita measured as a measure of economic growth
GDP/ population
What are the cons of using GDP/Capita as a measure of economic growth
Income may be a repatriated
Does not take remittances into account
How is GNI per capita calculated as a measure of economic growth
Income earned by domestic workers/firms - income earned by forge in workers/firms
A con of GNI per Capita
Does not account for FDI
(Foreign direct investment)
Cons of Green GDP
GDP could fall dramatically
Costs are difficult
4 benefits of economic growth
Increased disposable income
Increased employment
Increased profit for firms
Increase in tax revenue
3 vague cons of economic growth
Inflation
Current account deficit
Income inequality Other quality
Inflation
Current account deficit
Income inequality
How can economic growth cause income inequality
Capital incentives
One sector dominance
Poor quality jobs
Lack of wellfare state
Factors to consider/evaluate during economic growth
Is it sustainable?
Is it inclusive?
Is growth balanced?
Role of gov
Role of private sector
what is the relationship between growth and development
Growth does not = development
Growth is necessary but is not a sufficient condition of development
Briefly why is growth good for development
Higher incomes
Higher profits
Fiscal dividend (higher gov revenues can be used for expenditure on healthcare/education)
What is the best measure of economic development
HDI
human development index
What does HDI measure
Health: life expectancy
Education: mean years of schooling
Living standards: GNI per Capita
