Definitions
Dependency ratio
how many people are dependent on others for money
or
an age-population ratio of those typically not in the labor force and those typically in the labor force. It is used to measure the pressure on the productive population.
why do higher savings lead to economic growth
more money saved -> bank has more money to lend to firms -> firms invest -> economic growth
How is health care measured? - mention at least 2 ways
Life expectancy
Child mortality rates
country's annual expenditure on healthcare
How does education affect living standards
More people are more educated → qualified for better jobs → higher living standards
what is the most used indicator of standards of living in a country?
Income
Productivity
a measure of the efficiency of inputs used in the production process over a period of time
Why are countries with mostly primary sector activity less developed?
people have low wages due to jobs not needing much skill + raw materials generate lowest profit in production chain.
How does foreign direct investment affect productivity
increase quantity + quality of physical capital → boosts productive capacity + competitiveness in the long run → should also create jobs → economic growth
Why do more people not = higher economic growth
even though more people might increase higher tax revenue, government expenditure is spread across more people
what is the difference between economic growth and economic development
economic growth - the amount of goods and services produced per head of the population over a period of time. (increase in GDP overtime)
economic development - changes in income, savings and investment along with progressive changes in socio- economic structure of country
Economic development
an intangible concept that considers both quantitative and qualitative variables in raising the standard of living within a country
high dependency ratio --> less money available for saving + investment --> less economic growth
Why are natural resources not enough for economic growth
natural resources are often too cheap + people working in primary sector -> low wages
how does rapid population growth affect the earths scarce resources and how does this affect economic growth
increases competing pressures on earth's scarce resources → hinders economic development
Does a high GDP mean better living standards?
no - Even Though GDP per capita can be high there can still be a big difference in income → poor living standards