Lesson 13

    Cards (23)

    • What is the definition of economic growth?
      The rate of change in real GDP per capita over a long period of calendar time
    • What are the four key points about the definition of economic growth?
      1. Focus on real GDP growth at constant prices.
      2. Measured in per capita terms to account for population growth.
      3. Assessed over long periods (7 to 10 years).
      4. Growth rates should be measured from the same point in the business cycle.
    • What was the economic growth rate in the UK from 1700 to 1750?
      0.6% per annum
    • What was the economic growth rate in the UK from 1750 to 1776?
      1. 0% per annum
    • What was the economic growth rate in the UK from 1776 to 1800?
      1. 8% per annum
    • What was the state of economic growth before the 18th century?
      There was no economic growth until the 18th century
    • Who was the originator of the Classical model of economic growth?
      Adam Smith
    • What were the three pre-requisites for economic growth according to Adam Smith?
      Security of property, control of primogeniture, and state-provided infrastructure
    • How does the division of labour affect productivity according to Adam Smith?
      • Increases output through:
      1. Improved dexterity of the workforce.
      2. Time saved moving between tasks.
      3. Employment of machinery.
    • What is the relationship between capital accumulation and wages according to the Classical model?
      As capital accumulates, wages rise
    • What assumption did Smith make about population growth and output?
      He assumed extra population would lead to more output
    • What was Malthus's theory of population growth?
      Population grows geometrically while food supply grows arithmetically
    • What checks did Malthus propose to restrain population growth?
      Preventive checks (moral restraint) and positive checks (misery)
    • What did Malthus believe about economic growth and living standards?
      Economic growth would not raise average living standards due to population growth
    • What was Ricardo's view on the Corn Laws and economic growth?
      He believed growth depended on the repeal of the Corn Laws
    • What is the relationship between rent, average product, and marginal product in Ricardo's model?
      • Rent is the vertical gap between average product (AP) and marginal product (MP).
      • Marginal land determines the rental value of more fertile land.
    • What happens to profits as rents increase in Ricardo's model?
      Profits are squeezed as rents increase
    • What is the "stationary state" in Ricardo's theory?
      It is the point where profits fall so low that there is no incentive to invest
    • What were the main points of Marx's critique of capitalism?
      • Capitalists exploit workers by paying less than the value of their output.
      • The organic composition of capital rises with mechanization.
      • The proletariat becomes pauperized due to industrial concentration.
    • What did Marx believe would lead to a socialist revolution?
      The workers revolting and taking over the means of production
    • What evidence supports Marx's model of growth?
      • Decline in wages for hand-loom weavers in the early 1800s.
      • Improvement in working conditions after 1850.
      • The Factory Act 1833 and Education Acts 1870.
    • What are the key differences between Ricardo's and Marx's views on economic growth?
      • Ricardo saw conflict between landlords and capitalists.
      • Marx focused on conflict between workers and capitalists.
      • Both viewed capital as essential for growth.
    • What is the overall summary of the Classical model of economic growth?
      • Society is divided into classes with specific economic functions.
      • Capitalists drive growth through profit investment.
      • Class conflicts are inevitable in the pursuit of growth.
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