chapter 5 Flashcards
Economic growth
is the growth in GDP over time
Gross domestic product GDP
is the total market value of goods and services produced in an
economy in a year.
Rate of economic growth =
change in GDP between year 1 and year 2 * 100 / GDP in year 1
6 factors of economic growth
Investment
technology
education and training
labour productivity
the size of the workforce
natural resources
Benefits of economic growth
a rise in living standards
a reduction in poverty
a rise in the welfare of the population
a rise in employment
Benefits of a rise in living standards
everyone, on average, has more output to consume than before
Benefits of a reduction in poverty
with more tax revenues from incomes and spending the government can use
these revenues to raise the living standards of those on lower incomes.
benefits of a rise in the welfare of the population
the additional tax revenues can also be spent on health and
education improving the general welfare of the population.
benefits of a rise in employment
more workers will be needed to produce the extra output. This will enable the
government to achieve its aim of a high rate of employment.
Economic growth costs
Environmental costs
air pollution
a lower quality of life
inequalities of wealth and
income
congestion
loss of non-renewable resources
Inflation
