3.1 Economic growth

• What is fair distribution of income?

  How income should be shared among individuals
• What does economic growth refer to?

  The growth in GDP over time
• What is GDP?

  Total market value of goods and services
• How is the economic growth rate calculated?

  Rate of GDP growth = change in GDP/ original GDP x100
• If a country had a GDP of £500 billion in 2022 and £510 billion in 2023, what is the economic growth rate?

  2%
• What is GDP per capita?

  GDP divided by the population
• Why has GDP per capita increased?

  Advances in technology and changes in productivity
• What are the factors of production?

  • Capital: Goods used in production
  • Enterprise
  • Land: Natural resources for production
  • Labour: Human input in production
• What is the role of capital in economic growth?

  It allows production of more goods and services
• How does education and training affect economic growth?

  Higher education leads to higher output
• What impact does the size of the workforce have on economic growth?

  More labour available increases production capacity
• How does technology influence economic growth?

  Improves quality of capital goods
• What is labour productivity?

  Output per worker over time
• How can natural resource development boost economic growth?

  Discovery of resources increases production capacity
• What are the roles of government in economic growth?

  • Influencing demand through tax policies
  • Influencing supply by investing in infrastructure
  • Supporting businesses to operate efficiently
• What is a command economy?

  Government decides resource allocation
• What is the purpose of supply-side policies?

  To increase the amount produced in the economy
• How can government influence demand in the economy?

  By adjusting taxes to affect spending
• What is the impact of government investment in infrastructure?

  It helps businesses produce more efficiently