Economic Growth

Question 1

What is economic growth?

Answer 1

an increase in the long-run productive capacity of the economy.
t is an increase in total output over a period of time using the same or fewer resources. The Gross Domestic Product (GDP) is commonly used as a measure of economic growth.

Question 2

How can you increase economic growth?

Answer 2

-Growth in the amount of machinery available to produce products
-Growth in the size of the labour force
-Growth in the quality of the labour force
-Technological progress and innovation leading to improvements in productivity
-Reclaiming land

Question 3

How can growth in the amount of machinery available to produce products be achieved?

Answer 3

This can be achieved by encouraging greater investment by firms through subsidies, lower corporation tax and/or low interest rates.

Question 4

How can growth in the size of the labour force be achieved?

Answer 4

The government can achieve this by increasing the retirement age or encouraging labour to come to the UK from other countries.

Question 5

How can growth in the quality of the labour force be achieved?

Answer 5

The government can invest more money in education to improve the quality of the labour force. Moreover, improvements in health and wellbeing will also achieve this.

Question 6

How can Technological progress and innovation leading to improvements in productivity be achieved?

Answer 6

The government can give tax breaks to firms so they invest in this and/or they could subsidise research at universities.

Question 7

What land would we want to reclaim?

Answer 7

This could be from rivers or the sea e.g. Dubai in the UAE created land by building The Palm.

Question 8

What is the standard of living?

Answer 8

Standard of living refers to the quantity and quality of material goods and services available to a given population.

Question 9

What is the most common way of measuring the standard of living?

Answer 9

GDP per capita

Question 10

What are the issues associated with measuring the standard of living by GDP per capita?

Answer 10

-Regional variations in income and spending
-Inequalities in income and wealth
-Leisure and working hours and working conditions
-Imbalances between consumption and investment
-Changes in life expectancy
-The value of non-marketed output
-Innovation and the development of new products
-Environmental considerations

Question 11

Other Methods of Measuring Standards of Living?

Answer 11

The Human Development Index uses health and education statistics in addition to GDP.
The UN’s Multidimensional Poverty Index uses 10 indicators; including nutrition, sanitation, and access to cooking fuel and water.
Gross National Happiness?