Macro: Growth

Question 1

Economic growth

Answer 1

Increase in the value of national output

Question 2

How do we measure growth?

Answer 2

% change in GDP/real GDP

Question 3

What is real GDP

Answer 3

GDP adjusted for inflation

Question 4

What is economic development

Answer 4

Development that seeks to improve the economic well being and quality of life for a community

Question 5

How can we measure development?

Answer 5

Human Development Index(HDI)-life expectancy, average schooling v expected, health etc

Question 6

Top 4 ranking HDI countries?

Answer 6

Country:           HDI:
Norway          0.944
Australia        0.935
Switzerland   0.930
Denmark       0.923

Question 7

Bottom 4 HDI countries

Answer 7

Niger - 0.348
Central african republic- 0.350
Eritrea-0.391
Chad 0.392

Question 8

Highest GDP

Answer 8

Usa
China
Japan

Question 9

Lowest gdp

Answer 9

Syria
Tuvalu
Kiribati

Question 10

High GDP low HDI

Answer 10

India-130th hdi(0.609)
           GDP 7th (2,250 billion)

Question 11

Low GDP high HDI

Answer 11

New zealand (9th) HDI-0.913
GDP-(53rd) 179 billion

Question 12

HDI adjusted by innequality

Answer 12

Norway 0.893
Netherlands 0.861
Switzerland 0.861
Australia 0.858

Question 13

Inequality adjusted HDI

Answer 13

Combines a countries average achievements in health,education and income and how they are distributed along a countries population by discounting each dimensions average value According to its inequality .

Question 14

Advantages of growth

Answer 14

Improvements in living standards
More jobs
Greater business confidence

Opportunity for better environment- countries become richer they can invest in cleaner energy

The accelerator effect on investment on capital- as output rises firms need to invest in more capital to maintain LRAS

Question 15

Disadvantages of growth

Answer 15

Environmental e.g. Pollution

Question 16

Barriers to economic growth and development

Answer 16

Poor infrastructure

Corruption

Inadequate human capital

Lack of property rights

Primary product dependency

Volatile earnings from commodities

Underdeveloped financial system

Institutional factors

Question 17

Policies to promote econ growth and development

Answer 17

Market based
Trade liberalisation

Removal of subsidies

Policies to attract inward investment

Allowing to the price mechanism to work more freely

INTERVENTIONST

infrastructure investment

Education and training

Investment in tourism and other services

Overseas aid

Debt cancellation

State investment in the welfare system and

Question 18

Role of trade promoting growth and development

Answer 18

Trade

Allowing free trade helps development as countries benefit from specialisation in industries where they have competitive advantage

As long as trade takes place between other countries with minimal barriers, the gains from specialisation can be shared between all

Some economists have argued that in reality governments will protect their industries from low cost competition in less developed economies claiming that these countries have an unfair advantage In terms of low cost

Question 19

Aids role in growth and development

Answer 19

International Aid can take many forms, it is usually provided by developed countries for less developed countries

Common forms include:
Money- soft loans- loans to less economically developed countries below the market interest rate with favourable payback conditions

Goods and services

Aid can be helpful if it comes with no to little conditions attached to it

Question 20

How can aid be inappropriate

Answer 20

Money may get channeled into benefiting a small group of people in the LEDC

Conditional aid may largely benefit the developed economy granting the aid, if it has to be spent on goods from the economy giving the aid

The systems for distributing aid may not exist meaning few may benefit from the aid

Goods and services may not be suitable for the needs of the population

Those receiving the money may not have the expertise to spend it wisely