Topic 3 - Eco Growth

Question 1

What is eco growth?

Answer 1

The increae in an economies real GDP

Question 2

How can you increase eco growth in the long run ?(4)

Answer 2

Increase avalability of land and raw materials
Increase the quality and quantity of capital and labour
Increase the level of entrpreneurship and innovation in the economy
Increase the supply of labour and it’s mobility
Tech imprvements
Expand capital stock
Improve human capital

Question 3

What are the advantages of Eco growth?(4)

Answer 3

An increase in standard of living and welfare
Consumers are able to purchase better goods and services
Reduction in poverty
Increase in income tax t ofund more schemes
An increase in income tax, allowing the government to fund more public and merit goods and services
Ability to correct market failiures
Higher incomes
Benign deflation
Higher employment
Reduced budget deficit

Question 4

Disadvantages of eco growth(4)

Answer 4

Negative externalities 
Unequal distribution of benifit and income 
Inc in relative poverty 
Possible urbanisation 
Possible inflation 
Lower budget deficit
Depletion of non renewable resources

Question 5

What is sustainable eco growth

Answer 5

Economic growth that does not deplete an economies resources for future generations

Question 6

Is economic growth (GDP) a good measure of standard of living)

Answer 6

No, it is not the best

Question 7

Why is eco growth not the best for measuring standards of living(3)

Answer 7

Does not measure non monetised economies (black market, etc)
Does not measure quality changes
Does not measure the vvalue of leisure or what is being produced

Question 8

What are some better ways of meausuring standard of living than Eco growth

Answer 8

HDI

GNI

Question 9

What is HDI

Answer 9

Human development index - measures numerous things to do with people

Question 10

What is GNI

Answer 10

Money made by an economies residents from assets and investments

Question 11

What is the economic cycle

Answer 11

The growth/rate of the economy

Question 12

What is a positive output gap

Answer 12

Where actual growth is greater than projected

Question 13

What is a negative outpiut gap

Answer 13

Where actual growth is less than projected

Question 14

What are features of a positive output gap(4)

Answer 14

Increased profit
Lower interest rates
Inc employment
Higher GDP and AD

Question 15

WHat are some bad things about a positive output gap

Answer 15

Workers demand higher wages

Higher inflation

Question 16

What are factors that affect the economic cycle?(4)

Answer 16

Fluctuations in AD
Supply side factors
Speculative bubbles
Outside shocks

Question 17

What are fluctations in AD

Answer 17

Something that influences one of the 4 factors of AD

Question 18

What are supply side factors

Answer 18

Factors affecting the 4 factors of production.

Question 19

What are speculative bubbles

Answer 19

Where a rapid rise in eco growth, causes and increase in asset prices

Leading to people selling for higher prices

Leading to those buying to realise they have overpaid and trying to rapid sell

Leading to negative eco growth

Question 20

What are outside shocks -

Answer 20

Something unexpected that affects either supply or demand

Question 21

What is a supply side shock

Answer 21

Something unexpected affecting production rates and costs

Question 22

WHat is a demand side shock

Answer 22

Something that affects the one of the 4 factors of AD (but unexpectedly )

Question 23

What is cyclial instablity

Answer 23

a stage in which the economy is going through a recession or an unhealthy expansion associated with an increase in the price level.

Question 24

what are supply side shocks

Answer 24

somethign unexpected affecting costs of production and teh 4 factors

Question 25

examples of + ss shocks

Answer 25

reduced commdoity price
break through of tech
economic down turn of tradign partners

Question 26

exampels of - ss shocks

Answer 26

pandemics
war
surge in commdoity prices