2.5 Economic growth Flashcards
2.5.1 A)
Factors which could cause economic growth
inc in qual/quantity of factors of production
all factors of AD
technological advancements
efficnency
2.5.1 B)
The distinction between actual and potential growth
autual growth is percentage chage in gdp
potential growth is change is possability of economy
means more recources have been discoverd of technogoical advancements.
2.5.2 A)
Distinction between actual growth rates and long-term
trends in growth rates
long run trend is the avg rate of economic growth
actual is real change in real gdp overtime
diff betweem the two is output gap.
2.5.2 B)
Understanding of positive and negative output gaps
Pos gap means gdp ^ then est
visa vera
its difficult to measure
2.5.3 A)
Understanding of the trade (business) cycle
Diagram in book
2.5.3 B)
Characteristics of a boom
national income ^
pos opt gap
^ components of ad
inflationary pressure ^
2.5.3 C)
Characteristics of a recession
high unemployment
low components of ad
v inflationary pressure
recession is 2 sucessive quaters of gdp falling
2.5.4 A)
The benefits and costs of economic growth and the
impact on:
consumers
Pos welfare effect
v price
^ qual
^ subjective happniess
^inequality
inflation
2.5.4 A)
The benefits and costs of economic growth and the
impact on:
firms
investment
^busniess confidence
^innvoation = ^ eff = v cost of production
^ profit
firms w inferior goods may lose out
2.5.4 A)
The benefits and costs of economic growth and the
impact on:
the government
^ tax rev
more money 4 public goods ^ living std
v budget deficit
more expectations for govt better public goods
2.5.4 A)
The benefits and costs of economic growth and the
impact on:
current and future living standards
v poverty
^ health
^ exploitation of env
^ inequality
^ govts spending to ^ std of living
