economic growth

Question 1

what is econ growth

Answer 1

an increase in the production of economic goods and services compared from one periof of time to another.

Question 2

what happens to ppc curve when there is economic growth

Answer 2

it shifts outwards

Question 3

what is the business cycle

Answer 3

natural rise and fall of economic growth (Real GDP) that occurs over time

Question 4

what r the 4 phases of the business cycle

Answer 4

growth (expansion)
peak
recession (contraction)
Trough

Question 5

what is expansion

Answer 5

speed up in the pace of econ. activity

Question 6

define peak

Answer 6

highest point in the business cycle where gdp is highest

Question 7

define contraction

Answer 7

a slowdown in pace of econ. activity

Question 8

trough

Answer 8

lowest turning point of business cycle where gdp is lowest

Question 9

what is gdp

Answer 9

total value of output produced in an economy

Question 10

diff. between real and nominal gdp

Answer 10

real gdp takes inflation into account

Question 11

what r the three methods of gdp calculation

Answer 11

income method
expenditure method
output method

Question 12

how to calculate gdp with expenditure

Answer 12

consumer expenditure + investment expenditure + government expenditure + (exports-imports)

Question 13

how to calculate gdp with income

Answer 13

income of labour (wages and salaries) + profits of private sector businesses + rent income from ownership of land

Question 14

how to calculate gdp with output method

Answer 14

value of agricultural sector output + value of manufacturing sector output + value of services sector output

Question 15

list and explain 2 importances of gdp

Answer 15

• enables policy makers and central bank to judge whether the economy is contracting or expanding, whether it needs a boost or restraint and if threats such as recession and inflation loom on the horizon
• allows policy makers, businesses and economicsts to analyze the impact of variables such as monetary and fiscal policy, economic shocks such as spike in oil price as well as tax and spending plans on the overall economy and specific parts of it.

Question 16

explain the parts of the business cycle (demand, prices, investment, employment)

Answer 16

demand, prices, investment, employment and gdp increasing during growth and r highest during peak, they start decreasing during a recession and r lowest during a slump.

Question 17

list 5 importances of econ. growth

Answer 17

econ. growth -> higher tax revenue -> public sector investment -> private sector investment -> increased productive capacity -> econ growth

Question 18

what is econ welfare

Answer 18

level of prosperity and quality of living standards in an economy

Question 19

list 3 ways to measure economic welfare

Answer 19

real gdp per capita
human development index
genuine progress indicator

Question 20

Define real gdp per capita

Answer 20

measure of a countrys economic output that accounts for its no. of people

Question 21

real gdp per capita formula

Answer 21

real gdp/population

Question 22

what is human development index

Answer 22

composite measure of nations social and economic development developed by the UN that includes measures of health, wealth and education

Question 23

what is gpi

Answer 23

a measure of a nations quality of life that includes the income and output measured by gross domestic product but subtracts out the costs of negative effects related to economic growth and the costs of climate change.

Question 24

what is the range of hdi value

Answer 24

index has value between 0 and 1

Question 25

what is the difference between econ growth and econ welfare

Answer 25

econ growth is an increase in the productive capacity of an economy and real national income buy econ welfare is a more rounded measure of progress in improving quality of life by taking into account non financial factors such as education outcomes.