economic growth and business cycle

Question 0

economic growth

Answer 0

• increase in an ability to satisfy the needs and wants of its people
• measured in GDP
• ## important as standard of living increases

Question 1

when does economic growth occur?

Answer 1

• exists when there is a rise in the vol of goods and services produced by a country between one year and next

Question 2

negative economic growth

Answer 2

• recession

- 6months of negative economic growth

Question 3

GDP

Answer 3

• needs to take into account of inflation
• changes in the distribution of income
• population changes
• changes in the quality and availability of goods
• composition of output
• negative externalities
• depreciation of resources
• working hours

Question 4

social impact of growth

Answer 4

• use of finite natural resources
• resources being depleted
• impact of family life of one / both partners working hours
• additional stresses on our social & physical urban infrastructure causes by greater industrial dev.

Question 5

how does economic growth occur?

Answer 5

• rate of population change
• rate of increase in capital per worker
• technological progress and the applicatjon of new ideas to the prkductive process
• improvement in skill / productivity of the labour force
• size of natural resources
• capacity of an economy to change
• willingness of an economy to trade with overseas countries

Question 6

human capital

Answer 6

• stock of knowledge and skill that people develop through education and experience

Question 7

capital widening

Answer 7

• maintains the stock of capital per head

- population grows must increase the stock of capital

Question 8

capital deepening

Answer 8

• increasing in the stock of capital relative to the stock of other productive resources

Question 9

technology and embodied and disembodied technological progress

Answer 9

• the ideas or methods used in production
• disembodied techniques: new techniques and procedures
• embodied techniques: capital equipment and improvements in capital punishment

Question 10

optimal growth rate

Answer 10

• can be determined when the lines of total benefits and total costs cross

Question 11

Is GDP a good measure of the standard of living?

Answer 11

• no, but it is the best
• does not measure what part / sector grows
• does not take into account the non-market production that makes up a significant component of our welfare such as housework
• does not measure changes in overseas trading relos
• does not measure improvement of the quality of goods

Question 12

business cycle

Answer 12

• known as a periodic but irregular up and down movement in economic activity
• measured by fluctuations in GDP
• measured by percentage change in real GDP

Question 13

boom

Answer 13

• confidence increases
• unemployment levels fall
• business starts increasing their construction levels
• rise in national income
• rapid increase in economy
• inflation increases at very high rates

Question 14

contraction / recession

Answer 14

• risk increases
• profits squeezed by rising costs
• falling aggregate output and income levels
• rate of growth slows

Question 15

trough

Answer 15

• higher levels of cyclical unemployment
• lower levels of company profits
• slow growth rates of consumer spending, and a reduction in sales of consumer durables
• lower levels of consumer and business confidence
• prices of goods may fall
• levels of savings rise

Question 16

upswing

Answer 16

can be called expansion

• falling unemployment
• increase demand for resources
• economic growth rates are positive
• multiplier effect causes more jobs and income

Question 17

business cycle defined

Answer 17

• regular oscillation of economic activity

Question 18

multi-factor productivity

Answer 18

• relates to several changes of outputs to inputs
• measured residually
• MFP reflects the combined effects of new tech.