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Flashcards in economic growth Deck (23):
1

law of demand

- inverse relationship between price and quantity demanded.
- buyers are willing and able to buy more goods at a lower price

2

law of supply

- positive relationship between price and goods supplied
- as price rises supply expands
- as price falls supply contracts

3

non-price factors effecting demand

- price of a substitute good
- price of a complimentary good
- advertising and media
- trends
- season
- population
- income

4

non-price factors affecting supply

- technology (new machinery)
- season
- price of resources

5

demand, supply and equilibrium, explain what a surplus and a shortage is

- when supply and demand are equal
- shortage is when demand is greater then supply
- surplus is when supply is greater then demand
- when shortage occurs prices rises
- when surplus occurs price falls
- at equilibrium resources are used most efficiently and not wasted
- both the buyer and seller are happy with the price (both benefit)
- no tendency to change at this point

6

economic growth

- the measure of a countries success
- the increasing ability to satisfy the wants of the people
- indicates the level of production and spending

7

what does GDP stand for and what does it measure

- gross domestic product
- measures the production and spending of an economy

8

governments target rate

3-4%

9

calculate GDP per capita

nominal GDP divided by the amount of people

10

calculate GDP growth rate

year 2 - year 1 divided by year 1 x 100

11

why is it bad to go below 3%

- people aren't willing to spend as much money
- means businesses aren't making as much
- having to cut down on employees
- higher unemployment
- negative impact on the economy

12

benefits of GDP

- calculate the growth rate of an economy year after year
- compare countries
- used to find GDP per capita
- see if an economy decreases or increases
- summary of how the economy is doing

13

limitations of GDP

- doesn't take into account inflation
- doesn't take into account any work that is not paid for eg. done at home
- doesn't take into account any damage to the environment or cleaning up after natural disasters
- doesn't take into account how income is distributed, the rich become richer and the poor poorer

14

demand and supply factors that cause economic growth

demand:
- rising in spending (consumption)
- rising in spending by businesses (investments)
- higher sending by the government
- high demand for exports
supply:
- immigration (increased demand for goods and services)
- rising productivity (producing more with less resources, improve technology or train workers more effectively)

these causes a rightward shit of the PPF

15

real GDP

- total GDP that takes into account inflation and population
- measure of the value of economic output adjusted

16

nominal GDP

- total GDP of a country
- without taking into account inflation and population

17

why is it bad to go above 4%

inflationary pressure (high inflation)
- less spending
- less profit
- more unemployment
- increasing poverty (not as much pay)
- decrease the ability of individuals and families to meet the everyday costs
- workers put pressure on prices
- high demand for goods
environmental damage
- increase in pollution (air, water and land)
- climate change
- natural resources become scarce/depleted e.g oil or trees

18

costs of economic growth above 5%

- less spending
- less profit
- less employment
- increased poverty
- decrease the ability of individuals and family’s to meet everyday costs
- naturals resources become scare/deleted eg oil and reed
- increase in air water and land pollution
- climate change

19

benefits of economic growth

- higher income is better
- higher nations GDP per capita the easier it is to provide better quality education and health services
- more employment

20

benefits of economic progress

- if the economy is able to increase its GDP
- time spent working will fall
- more time to do things that increase our wellbeing
- wages have risen a lot more then the price of goods
- takes into account the wellbeing of the community

21

inflation

the rate of which the price of goods and services increases

22

benefits of economic growth over 5%

- increased jobs
- more production
- more goods and services produced

23

alternate measures of GDP

gross national happiness and social progress indicators
measure
- measures social progress and wellbeing
- it takes into account education and health and amount of leisure time