Topic 3 - Eco Growth Flashcards
What is eco growth?
The increae in an economies real GDP
How can you increase eco growth in the long run ?(4)
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
What are the advantages of Eco growth?(4)
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
Disadvantages of eco growth(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
What is sustainable eco growth
Economic growth that does not deplete an economies resources for future generations
Is economic growth (GDP) a good measure of standard of living)
No, it is not the best
Why is eco growth not the best for measuring standards of living(3)
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
What are some better ways of meausuring standard of living than Eco growth
HDI
GNI
What is HDI
Human development index - measures numerous things to do with people
What is GNI
Money made by an economies residents from assets and investments
What is the economic cycle
The growth/rate of the economy
What is a positive output gap
Where actual growth is greater than projected
What is a negative outpiut gap
Where actual growth is less than projected
What are features of a positive output gap(4)
Increased profit
Lower interest rates
Inc employment
Higher GDP and AD
WHat are some bad things about a positive output gap
Workers demand higher wages
Higher inflation
What are factors that affect the economic cycle?(4)
Fluctuations in AD
Supply side factors
Speculative bubbles
Outside shocks
What are fluctations in AD
Something that influences one of the 4 factors of AD
What are supply side factors
Factors affecting the 4 factors of production.
What are speculative bubbles
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
What are outside shocks -
Something unexpected that affects either supply or demand
What is a supply side shock
Something unexpected affecting production rates and costs
WHat is a demand side shock
Something that affects the one of the 4 factors of AD (but unexpectedly )
What is cyclial instablity
a stage in which the economy is going through a recession or an unhealthy expansion associated with an increase in the price level.
what are supply side shocks
somethign unexpected affecting costs of production and teh 4 factors
examples of + ss shocks
reduced commdoity price
break through of tech
economic down turn of tradign partners
exampels of - ss shocks
pandemics
war
surge in commdoity prices
