Economic Growth

• What does GDP mean?

  Gross Domestic Product
• What measures can be used to measure economic growth?

  • GDP
  • GDP per capita
• How does a country see economic growth?

  Increase in the value of products produced in the country.
• How can GDP be increased?

  • Improvements in quantity of products produced
  • Improvements in quality of products produced
• Why is economic growth important for a government?

  Increased GDP per capita allows for consumers to spend more in the economy, improving their standards of living. Also, the government will receive higher revenues due to taxes.
• How might economic growth impact employment?

  Increased growth generates demand for labour to produce products, meaning that there is less unemployment.
• How might economic growth impact inflation?

  Higher growth may cause demand pull inflation due to a shift in Aggregate Demand to the right.
• How might economic growth affect the Balance of Payments?

  As consumer incomes increase due to economic growth, the demand for imported goods increases. Because of this, there is an increase in import expenditure, worsening the Balance of Payments.