THEME 2 - Topic 6 - Economic growth Flashcards
(18 cards)
Define actual economic growth
The rate of growth of real GDP in a period.
Define potential economic growth
An increase in the productive capacity of the economy.
What type of economic growth is often referred to as short-run?
Actual economic growth.
What type of economic growth is often referred to as long-run?
Potential economic growth.
Define the business cycle
Is a phenomenon whereby GDP fluctuates around its underlying trend, following a regular pattern.
Define a recession
Occurs when GDP falls for 2 or more consecutive quarters.
Define the alternative actual economic growth
Is said to occur when an economy increases its output as a result of an increase in aggregate demand.
Define the alternative potential economic growth
Takes place when the productive capacity of the economy increases.
Define productivity
Is a measure of the efficiency of a factor of production.
Define labour productivity
A measure of output per worker, or per hour worked.
Define capital productivity
A measure of output per unit of capital per hour.
Define total factor productivity
The average productivity of all factors, measured as total output divided by the total amount of inputs used.
Define investment
Expenditure undertaken by firms to add to the capital stock.
Define net investment
Equal to Gross investment - depreciation.
Define depreciation
Is a fall in the value of physical capital equipment over time as it is subject to wear and tear.
Define human capital
Is the stock of skills and expertise that contribute to a worker’s productivity; it can be increased through education and training.
Define sustainable development
Is development that meets the needs of the present without compromising the ability of future generations to meet their needs.
Define export led growth
Is a strategy for achieving rapid economic growth through the promotion of export activity.
