2.5.4 The Impact Of Economic Growth

Question 1

Impact of economic growth

Answer 1

GDP rises = higher incomes = higher expenditure

Question 2

Benefits of economic growth on consumers

Answer 2

• can buy more g/s due to higher income/more expenditure
• consumers have enough to eat/drink (the amount is nearly always fit for consumption)

Question 3

Problems with economic cost on consumers

Answer 3

• increasing inequalities
• Karl Marx- workers would live one subsistence wages whilst al the benefits would go to rich (- e.g in USA, the average worker has seen almost no growth in income over 25 yrs when its economy has been growing by 2.5 per cent each year)

Question 4

Benefits of economic growth on firms

Answer 4

• Firms sell more goods therefore get more revenue can increase sales since consumers have higher incomes
• WIth better tech, some firms might experience increasing returns to scale
• give opportunities for new firms to establish themselves

Question 5

Problems with economic cost on firms

Answer 5

• some firms will find their markets disappearing due to changing technology

Question 6

Benefits of economic growth on current & future living standards

Answer 6

• longer life expectancy
• nearly everyone can read and write (high standards of education)
• better health (long life expectancy/quality)
• better welfare

Question 7

Problems with economic cost on current & future living standards

Answer 7

• benefits of economic growth depends on who receives the advantage. If only the richest receives benefits then it will have no impact on society - (The weaker the link between rising GDP and living standards, the less economic growth will benefit households & individuals)

Question 8

Benefits of economic growth on the government

Answer 8

• rising incomes = increase government tax revenues - less poverty means less benefits needing to be paid

Question 9

Problems with economic cost on the government

Answer 9

• more state pensions if people are living longer
• more healthcare costs
• not sustainable due to pollution (e.g draining resources)
• more need to spend on public services since more demand for public services
• consumers would want better education for their children, better roads to drive their cars,