5.1 Causes of Economic Growth Flashcards
(8 cards)
1
Q
What is economic growth?
A
Sustained rise in real national output
2
Q
What is short-run growth?
A
Increase in real output
3
Q
What is long-run gowth?
A
Increase in productive potential (PPF)
4
Q
Causes of short-run growth?
A
- Changes in int. rates
- Fiscal policy
- Exchange rates
- Confidence
5
Q
Causes of long-run growth?
A
- Investment
- Productivity
- Labour supply
- Innovation
6
Q
What is export-led growth?
A
Real GDP growth led by successful exports
(e.g. China, Ireland, South Korea)
7
Q
Advantages of export-led growth?
A
- Injection into circular flow of income
- Higher profits + investment
- Attract FDI
8
Q
Drawbacks of export-led growth?
A
- Over-dependence on trade partners
- Could lead to trade partner trade barriers
- Demand-pull inflation
