Economic Growth Flashcards
(15 cards)
What is economic growth?
an increase in real GDP
What does rate of economic growth measure?
the annual % change in GDP
What is real GDP?
Gross domestic product (GDP) measured in constant prices taking inflation tion account
What is GDP?
the monotary value of all the goods and services in an economy
How to calculate the GDP per Capita
GDP/ population
How can you calculate real GDP?
GDP - inflation
Name 5 benefits of economic growth
higher incomes
lower government borrowing
lower unemployment
improved public services
more profit for firms
Name 5 costs for economic growth
inflation
boom and bust economic cycles
balance of payments deficit
environmental costs
increased inequality
What is a boom and bust economic cycle
when economic growth is unsustainable high inflation may be followed by a recession
What are the two causes for economic growth?
increase in demand
increase supply (productive capacity)
Name five factors that cause an increase demand
a rise in wages
higher wealth
lower interest rates
lower taxes
fall in value of exchange rate
Name three policies to increase economic growth
fiscal policy
monetary policy
supply side policies
What does the fiscal policy do?
increase government spending
What does the monetary policy do?
cut interest rates
