Chapter 5 Year 11 cont

• What is economic growth?


  Growing over time.
• What does GDP stand for?


  Gross Domestic Product.
• What does GDP measure?


  The total market value of goods and services produced in an economy in a year.
• How is the rate of economic growth calculated?

  Rate of economic growth = Change in GDP year 1 and 2 / GDP in year 1 X 100
• What does GDP per capita represent?


  It is used as a measure of the average income each person in the country.
• How is GDP per capita calculated?


  By dividing GDP by the number of people in the population.
• Why is GDP per capita used?


  To rank the economic development of countries and compare living standards.
• What happens to GDP in a boom period?


  GDP is starting to increase, indicating that the market value for goods and services produced increases.
• What happens to GDP in a recession?


  The unemployment rate is high, and businesses are operating below capacity.
• What are the determinants of economic growth?


  • Investment
  • Technology
  • Education and training
  • Size of workforce
  • Natural resources
  • Labour productivity
• What are the benefits of economic growth?

  • Rise in living standards
  • Reduction in poverty
  • Increase in employment
  • Rise in welfare of the population
• What are the costs associated with economic growth?


  • Environmental costs
  • Inequality
  • Inflation