Flashcards on topic 2.1.1 Economic Growth from the edexcel specification

Question 1

What is economic growth?

Answer 1

An increase in the production of goods and services in an economy over time.

Question 2

True or False: Economic growth is measured by the increase in GDP.

Answer 2

True

Question 3

Fill in the blank: Economic growth is often expressed as a percentage increase in ______.

Answer 3

real GDP

Question 4

What does GDP stand for?

Answer 4

Gross Domestic Product

Question 5

What is the formula for calculating GDP?

Answer 5

C + I + G + (X - M), where C is consumption, I is investment, G is government spending, X is exports, and M is imports.

Question 6

What is the difference between nominal GDP and real GDP?

Answer 6

Nominal GDP is measured at current prices, while real GDP is adjusted for inflation.

Question 7

Multiple Choice: Which of the following is NOT a component of GDP? A) Consumption B) Investment C) Inflation D) Government Spending

Answer 7

C) Inflation

Question 8

What is potential output?

Answer 8

The maximum level of output an economy can sustain over the long term without increasing inflation.

Question 9

True or False: Economic growth can lead to higher living standards.

Answer 9

True

Question 10

What are the main sources of economic growth?

Answer 10

Increases in capital stock, improvements in technology, and increases in labor force participation.

Question 11

Fill in the blank: Economic growth can be classified into ______ growth and ______ growth.

Answer 11

short-term; long-term

Question 12

What role does technology play in economic growth?

Answer 12

Technology increases productivity, leading to higher output with the same amount of inputs.

Question 13

Multiple Choice: Which of the following is a measure of economic growth? A) CPI B) GDP C) Unemployment Rate D) Balance of Trade

Answer 13

B) GDP

Question 14

What is the business cycle?

Answer 14

The fluctuation of economic activity over time, including periods of expansion and contraction.

Question 15

True or False: Economic growth is always sustainable.

Answer 15

False

Question 16

What is the relationship between economic growth and inflation?

Answer 16

Economic growth can lead to inflation if demand outpaces supply.

Question 17

Fill in the blank: A significant increase in productivity can lead to ______ economic growth.

Answer 17

sustained

Question 18

What is the impact of foreign investment on economic growth?

Answer 18

Foreign investment can provide capital, technology, and expertise, accelerating economic growth.

Question 19

Multiple Choice: Which indicator is often used to assess the health of an economy? A) GDP B) Interest Rates C) Tax Rates D) All of the above

Answer 19

A) GDP

Question 20

What is a recession?

Answer 20

A period of temporary economic decline during which trade and industrial activity are reduced.

Question 21

True or False: Economic growth can have negative environmental impacts.

Answer 21

True

Question 22

What is the significance of the GDP per capita?

Answer 22

It measures the average economic output per person, indicating living standards.

Question 23

Fill in the blank: Economic growth can be influenced by ______ policies.

Answer 23

government

Question 24

What is structural unemployment?

Answer 24

Unemployment resulting from industrial reorganization, typically due to technological change.

Question 25

Multiple Choice: Which of the following is a benefit of economic growth? A) Increased employment B) Higher inflation C) Greater income inequality D) Reduced public services

Answer 25

A) Increased employment

Question 26

What is the significance of the long-run aggregate supply curve in relation to economic growth?

Answer 26

It represents the maximum sustainable output level of an economy, indicating potential growth.

Question 27

True or False: Economic growth guarantees wealth distribution.

Answer 27

False