Economic growth Flashcards
(7 cards)
1
Q
What is econ growth?
A
An increase in real gdp over a period of time
2
Q
What is actual growth?
A
An increase in output from rising AD (which depends on multiplier and which stage of the economy)
3
Q
What is potential growth?
A
When the productive capacity of the economy increases
Occurs when there is an increase in q2cell, improved tech and efficiency
4
Q
Pros of econ growth:
A
- Rising income for consumers
- More profit for firms
- Tech improvements for environment (greener energy)
5
Q
Cons of econ growth:
A
- Easterlin Paradox for consumers
- Business instability: growth of some industries but decline of others
- Inequality may grow
- Unsustainable use of resources for environment
6
Q
Causes of econ growth
A
- Export led growth (accelerator effect)
- Firms investing in local economies
- Purchase and use of capital goods
7
Q
Risks of export led growth:
A
- Persistent trade surplus with other countries may lead to retaliation
- Vulnerable to economic shocks in other countries
- Neglect of domestic economic and population needs
