4.4 Factors of Economic Growth

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What does Gross Domestic Product mean?

Back

The total value of all goods and services produced within a country in one year.

Front

The___________ a country’s GDP per capita, the better the country’s standard of living.

Back

greater

Front

What are the 4 factors that lead to a country’s economic growth?

Back

investment in human capital, investment in capital goods, land (natural resources), entrepreneurship

Front

What are natural resources?

Back

materials or substances that occur in nature and can be used for economic gain.

Front

Why is it beneficial for a country to have an abundance of natural resources?

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Countries that have a lot of natural resources are able to use them to produce goods and services cheaper than a country that has to import them. Therefore, a country with a lot of natural resources usually has a greater GDP than a country with little natural resources.

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What does human capital mean?

Back

the people who perform labor (work) plus their literacy, training, and skills

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Why should countries invest in developing human capital?

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Investment in the education and skills training of people creates a smarter and more productive workforce, which relates to a higher GDP.

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What are capital goods?

Back

the factories, machinery, and technology used to produce goods and services

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Why should countries invest in developing capital goods?

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When countries invest in capital goods, they are providing better facilities, resources, and/or materials for the people who perform the labor, which creates a more productive workforce leading to greater economic growth (higher GDP).

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What do entrepreneurs do?

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start their own business, invent something new, or change the way something was previously done so that it works better