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WorksheetsIBECO - 3.3 Economic Growth
Total questions: 23
Worksheet time: 15mins
Define economic growth
an increase in real GDP or the real quantity of goods and services produced over a period of time (typically a year), and is usually expressed as a percentage change in real GDP or GDP/capita over a period of time
refers to the natural rate of unemployment, or unemployment of labour that prevails when the economy is producing potential output, or real GDP, determined by the position of the LRAS curve (long run equilibrium)
refer to the maximum output of combination of two goods that can be produced in an economy with fixed resources and technology, provided there is full or maximum employment of resource and efficiency in production, implying zero unemployment
levels of income, wealth and consumption of goods and services, including healthcare and education
Define full employment level of output
an increase in real GDP or the real quantity of goods and services produced over a period of time (typically a year), and is usually expressed as a percentage change in real GDP or GDP/capita over a period of time
refers to the natural rate of unemployment, or unemployment of labour that prevails when the economy is producing potential output, or real GDP, determined by the position of the LRAS curve (long run equilibrium)
refer to the maximum output of combination of two goods that can be produced in an economy with fixed resources and technology, provided there is full or maximum employment of resource and efficiency in production, implying zero unemployment
levels of income, wealth and consumption of goods and services, including healthcare and education
Define maximum output
an increase in real GDP or the real quantity of goods and services produced over a period of time (typically a year), and is usually expressed as a percentage change in real GDP or GDP/capita over a period of time
refers to the natural rate of unemployment, or unemployment of labour that prevails when the economy is producing potential output, or real GDP, determined by the position of the LRAS curve (long run equilibrium)
refer to the maximum output of combination of two goods that can be produced in an economy with fixed resources and technology, provided there is full or maximum employment of resource and efficiency in production, implying zero unemployment
levels of income, wealth and consumption of goods and services, including healthcare and education
Define livings standards
an increase in real GDP or the real quantity of goods and services produced over a period of time (typically a year), and is usually expressed as a percentage change in real GDP or GDP/capita over a period of time
refers to the natural rate of unemployment, or unemployment of labour that prevails when the economy is producing potential output, or real GDP, determined by the position of the LRAS curve (long run equilibrium)
refer to the maximum output of combination of two goods that can be produced in an economy with fixed resources and technology, provided there is full or maximum employment of resource and efficiency in production, implying zero unemployment
levels of income, wealth and consumption of goods and services, including healthcare and education
Define actual growth
in PPC model, refer to growth that occurs due to the reduction of unemployment or improvement in efficiency of resource use, resulting in movement from inside PPC to point closer to PPC
in PPC model, refers to growth that occurs due to increase in quantity or quality of resources, resulting in shift to the right of PPC curve, also referred to as long-term growth
Define potential growth
in PPC model, refer to growth that occurs due to the reduction of unemployment or improvement in efficiency of resource use, resulting in movement from inside PPC to point closer to PPC
in PPC model, refers to growth that occurs due to increase in quantity or quality of resources, resulting in shift to the right of PPC curve, also referred to as long-term growth
What is the difference between actual and potential growth?
Time - actual occurs in short whilst potential usually requires longer periods of time
Factors of Production - actual growth involves using the same FOP more efficiently or productively, whilst potential growth is due to an increase in quantity or quality of FOP
GDP - actual growth increases GDP whilst potential only affects GDP/capital
Determinants - potential growth involves an increase in AD, whilst actual growth is focused on AS
Shifts - actual growth results in increase in AD or SRAS or movement towards PPC, whilst potential growth shifts LRAS or shifts of the PPC curve
The following is a diagram of _____
Actual growth - caused by increased in AD
Potential growth - caused by increased in AD
Actual growth - caused by increased in SRAS
Potential growth - caused by increased in LRAS
What may causes an increase in SRAS?
Fall in price of factors of production
Increases in subsidies
Positive supply shock
Increase in government expenditure
Increased investment
What factors lead to potential growth?
Technological change
Improvement in efficiency/ Institutional changes
Lower unemployment
Unused machinery being used productively
Increases in quantity/improvements in quality of FOP
The following graph represents?
Potential growth
Actual growth
Economic growth
Improvement in standards of living
The following graph represents?
Potential growth
Actual growth
Economic growth
Improvement in standards of living
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "A discovery of new oil reserves"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "A fall in natural unemployment"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "An increase in cyclical unemployment"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "An improvement in levels of health of the population"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "An improvement in efficiency in production"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "The widespread use of a new technology"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "A violent conflict destroys a portion of a country's factories, machines and road system"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "Large cuts in government spending on education and healthcare"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "An increase in quantity of capital goods"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "An improvement in the level of education and skills of workers"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
Based on the following statement, determine whether it will result in positive OR negative growth AND a shift in PPC OR movement towards the PPC - "Industrial pollution destroys the environment"
Positive
Negative
Shift in PPC curve
Movement towards PPC curve
