1) Economic Growth - MB

Question 1

define long-run economic growth

Answer 1

the expansion of the productive capacity of an economy

Question 2

define short-run economic growth

Answer 2

an increase in actual GDP

Question 3

define nominal value

Answer 3

value of an economic variable based on current prices, taking no account of changing prices through time

Question 4

define real value

Answer 4

vale of an economic variable, taking account of changing prices through time

Question 5

define real GDP

Answer 5

GDP at constant prices, taking account of changes prices through time

Question 6

define nominal GDP

Answer 6

GDP at current prices, taking no account of changing prices through time

Question 7

economic growth is reported monthly and quarterly by

Answer 7

the Office for National Statistics (ONS)

Question 8

what does the Office for National Statistics (ONS) do?

Answer 8

economic growth is reported monthly and quarterly by them

Question 9

long-run economic growth is an increase in the… of the economy

Answer 9

potential output

Question 10

long-run economic growth is an increase in the potential output of the economy by: (4 factors)

Answer 10

• improved quality or quantity of land
• improved quality or quantity of labour
• improved quality or quantity of capital
• improved quality or quantity of enterprise

Question 11

short-run economic growth is an increase in the use of…

Answer 11

factors of production

Question 12

short-run economic growth is an increase in the use of factors of production ie: (4 things)

Answer 12

• using more land
• using more labour
• using more capital
• using more enterprise

Question 13

economic growth is measured in terms of…

Answer 13

the rate of change of GDP

Question 14

what is the problem with GDP figures?

Answer 14

they don’t distinguish between long-run and short-run economic growth

Question 15

examples:
how can you improve the quality of land?

Answer 15

less building and crop rotation

Question 16

examples:
how can you improve the quality of labour

Answer 16

increase wages

Question 17

examples:
how can you improve the quality of capital?

Answer 17

upgrade train lines to high speed

Question 18

examples:
how can you improve the quality of enterprise?

Answer 18

entrepreneur mentoring scheme

Question 19

examples:
how can you improve the quantity of land?

Answer 19

discover new oil reserves

Question 20

examples:
how can you improve the quantity of labour?

Answer 20

lower legal working age

Question 21

examples:
how can you improve the quantity of capital?

Answer 21

build new roads, improve technology that manufactures technology

Question 22

examples:
how can you improve the quantity of enterprise?

Answer 22

lower interest rates to incentivise new business

Question 23

analysis of short run economic growth diagram:

Answer 23

economic output has increased from A to B, this could be due to increased utilisation of labour, and unemployment falls. As productive capuchos has not increased, only its utilisation, this is short-run economic growth

Question 24

analysis of long run economic growth diagram:

Answer 24

PPC0 has shifted outwards to PPC1, perhaps due to an inverse in the quantity of capital available. This allowed a movement of the economy’s output from point A to point B, as this new capital is utilised. As this increase in output is based on an increase in the productive potential of the economy, this is long-run economic growth

Question 25

economic growth is a… objective of almost all countries

Answer 25

fundamental

Question 26

what does economic growth allow?

Answer 26

increased living standards

Question 27

why is long-run economic growth probably the most important policy objective?

Answer 27

as all other policy objectives short-run goals to help achieve long-run economic growth