Economic growth

• What is economic growth?

  An increase in output over time
• How is national income measured?

  By the monetary value of goods and services
• What is real GDP?

  GDP adjusted for inflation
• What does nominal GDP represent?

  GDP at current prices
• What is gross net income?

  GDP plus net property income from abroad
• What are the different stages of the economic cycle?

  Boom, recession, trough
• What is the primary policy objective of economic growth in the UK?

  To achieve a steady rate of economic growth
• Why is economic growth an important indicator?

  It indicates the health of an economy
• What is the formula to calculate the rate of change in GDP?

  (Change in GDP / Original GDP) x100
• What does the economic cycle represent?

  Fluctuations of national output around its trend
• What characterizes a boom in the economic cycle?

  Actual growth exceeds the trend rate
• What happens during a slowdown/downturn?

  Economic growth rates begin to fall
• What defines a recession?

  Two consecutive quarters of negative growth
• What occurs during a recovery/upturn?

  Economic growth becomes positive again
• What causes short-run economic growth on the demand side?

  Changes in components of aggregate demand
• What are examples of demand-side changes?

  Lower interest rates, rising house prices
• What causes short-run economic growth on the supply side?

  Falling factor input prices
• What measures contribute to long-run economic growth?

  Investment in productive capacity and education
• What are some benefits of economic growth?

  Higher incomes and lower unemployment
• What are the costs associated with economic growth?

  Demand-pull inflation and income inequality
• What is long-run economic growth?

  An increase in productive potential of an economy
• How can long-run economic growth be achieved?

  By increasing quantity or quality of production factors