Ch18 Economic growth

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What is economic growth in the short run and long run?

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In the short run, economic growth is an increase in a country’s output. In the long run, it is an increase in the country’s economic potential.

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What is economic development?

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Economic development is the process of improving the economic well-being and quality of life of the population. It is related to economic growth, but much wider in its scope.

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How is economic growth measured?

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Economic growth is measured in terms of the annual percentage change in output (GDP).

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What is the difference between nominal GDP and real GDP?

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Nominal GDP is measured in terms of prices that were applicable in the year the output was produced. Real GDP removes the effect of inflation, making it easier to compare data from just one year and over time.

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What is the difference between actual growth and potential growth?

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Actual growth is when output increases. Potential growth occurs in the long run and leads to a rise in the productive potential in an economy.

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How is Nigeria’s economy affected by changes in the world price of crude oil?

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Nigeria’s economy is susceptible to changes in the world price of crude oil. After 2014, GDP growth fell, leading to only slight increases in living standards, reduced government revenue from oil, and pressure on the government to restructure the economy.

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What are the benefits and costs of economic development in Nigeria?

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Benefits include increased employment, improved living standards, less reliance on the oil sector, and more stable food supplies. Costs include environmental degradation, overcrowding in cities, deterioration in air quality, and concerns about decline in manufacturing.

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What does 'muted' economic growth mean for Nigeria?

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'Muted' implies that Nigeria’s economic growth is less than might be expected. The World Bank believes it should be much higher, given Nigeria’s considerable economic potential.