Economic growth

• What is an economic agent?

  An agent is an actor in a model of some aspect of the of the economy. Typically, every agent makes decisions by solving a well or ill-defined optimisation or choice problem. For, example, buyers and sellers are two common types of agents in partial equilibrium models of a single market.
• Give a short summary of an economic agent?

  producers, buyers, sellers, companies, government that influence the economy.
• What are some examples of economic agents?

  . sellers

  . buyers

  . firms

  . households

  . individuals

  . enterprises
• What is economic growth?

  Economic growth refers to an increase in the production and consumption of goods and services in an economy over a specific period of time, generally manifested by a rise in national income.
• How can economic growth be measured?

  The total production of goods and services in the economy, which is called gross domestic product (GDP).
• What is a very brief summary of economic growth?

  The increase in the productive potential in an economy.
• What is meant by the factors of production (FOP)?

  They are the inputs needed for creating a good or service, and those who control the factors of production often enjoy the greatest wealth in society.
• What do the factors of production include?

  Land

  Labour

  Capital

  Enterprise
• What is meant by GDP?

  The total number of goods and services in an economy in a given year. The value of output.
• What is meant by GNI?

  The total income received by a country from its residents and businesses all over the world.
• What does GNI stand for?

  Gross National Income
• What is meant by GNP?

  The value of all goods and services produced by the citizens of a country both domestically, and internationally minus the income earned by foreign residents.
• What does GNP stand for?

  Gross National Product
• What is meant by nominal GDP?

  The value of final goods/services within an economy without adjusting for inflation.
• What is meant by real GDP?

  Found after stripping out the effects of inflation, also known as constant prices.
• What does it mean to adjust for inflation?

  To adjust for inflation means to remove the effects of inflation from nominal prices or values so that their real changes can be compared over time.
• What does per capita mean?

  Per Capita means the average per person and is often used in place of ‘per person’.
• What is meant by fiscal deficit?

  When expenditure exceeds revenue of the government.
• What are some features that are not included in GDP?

  . environment - pollution, climate change

  . level of urbanisation

  . quality of education

  . geographic distribution of wealth and income

  . inflation rate - cost of living

  . proximity to essential services

  . life expectancy

  . access to healthcare

  . level of poverty
• What is meant by a recession?

  A negative economic growth over two consecutive quarters.
• What will GDP never be?

  0
• What is the trend line in the trade cycle?

  Trend line is what we can achieve.
• What are general elements of a peak/boom?

  . high levels of economic growth

  . low unemployment

  . high consumer spending

  . high business investment

  . rising inflation (caused by high demand)
• What are the general elements of a slump/recession/depression?

  . negative growth

  . high unemployment

  . low spending

  . low investment

  . falling inflation (caused by low demand)
• What is meant by the output gap?

  The difference between the actual level of GDP and its estimated long term value (at a point in time) is known as the output gap.
• what is meant by Production Possibility Frontier?

  A PPF shows the maximum possible output combination of two goods or services an economy can achieve when all resources are fully and efficiently employed.
• What causes a shift out in the PPF?

  A shift out is caused by an increase in the quantity or quality of the factors of production. A rise in a nation‘s productive capacity causes the PPF to shift out and this allows increased supply of consumer and capital goods.
• What are some policies that the government could put into place to support countries with high levels of poverty?

  . food banks

  . housing

  . taxing extra

  . spending more on public services

  . spending more on social services

  . investing in better infrastructure

  . increase minimum wage

  . allocate more jobs

  . give more subsidies
• What are some benefits of economic growth?

  . Lower unemployment

  . More FDI (inward)

  . Better infrastructure

  . Higher standard of living - more money

  . More businesses setting up

  . More investment in businesses

  . Higher tax revenue (income tax receipts, VAT, corporation tax)

  . Better access to health and education

  . Environmental benefits - more money to invest in improving the area, green energy sources.
• What are some drawbacks of economic growth?

  . Inflation

  . Bigger wealth inequalities

  . Bigger income inequalities

  . Negative externalities - environmental impact, e.g. more pollution as more employees driving to work

  . Worsening trade balance (higher impacts and stronger currency)
• What is the difference between economic growth and economic development?

  Economic growth refers to an increase in the quantity of goods and services produced in an economy, while economic development refers to improvements in the quality of life and well-being of people in an economy. Economic development focuses on political, cultural, social and economic indicators.
• What is meant by Purchasing Power Parities (PPPs)?

  PPPs are the rates of currency conversion that equalise the purchasing power of different currencies by eliminating the differences in price levels between countries. In their simplest form, PPPs are simply price relatives that show the ratio of prices in national currencies of the same good or service in different countries. PPPs are also calculated for product groups and for each of the various levels of aggregation up to and including GDP.
• What is meant by national happiness?

  Societal and personal well-being looking beyond what an economy produces, to areas such as health, relationships, education and skills, housing quality, finances and the environment.