Consequences
One negative effect of economic growth can be ______?
- A threat to sustainability, e.g. extracting resources like oil or minerals
- Inflation
- Uneven impact of growth
If there are improvements to the labour force (for instance due to the training) the long-term effect is a rise in ______
Productivity
The diagram showing movement from a point inside to the one closer to the curve is also abbreviated as a ____ diagram.
PPC
As Investment is one of the factors affecting AD, an increase in it will cause the AD to shift to the ____?
right
A component of AD that affects AS in the long-run.
Investments
This is lower in times of economic growth since there are many job opportunities.
Unemployment
This can lead to new creation and production of more capital as well as consumer goods
Investment
An ______ (increase/decrease) in actual output causes an increase in productive efficiency, leading to a movement of a point inside the PPC to a point closer to the PPC.
Increase
However, in the long run, too much investment may cause high rates of _____, when the economy “overheats”.
Inflation
What leads to under developing countries to remain underdeveloped, specifically relating to natural capital?
Being unable to change natural capital to physical capital due to lack of resources.
In what case an economic growth will not lead to inflation?
When there is an increase in AS
Progression in technology would lead to an increase in ________, which causes AS to shift to the right, leading to economic growth.
Productive capacity
If the production is taking place inside the PPC, is the unemployment ______ (less / more) than the natural rate of unemployment?
More
In the long run, the investment will also ____ aggregate supply.
increase
What is Economic Growth?
Economic growth is an increase in real output over time. It is measured by changes in real GDP.
Those who own the factors make more than those who are the factors of production. What does it mean in terms of the consequences of economic growth?
Income distribution - The effects of economic growth are uneven.
When there is an increase in total demand, in the short-term no more can be produced because the country is ____
operating at full capacity (or utilising its resources fully and efficiently)
On a PPC curve, an increase in actual output caused by a reduction in unemployment would lead to _____.
A movement of a point inside the PPC to move closer to the PPC maximum point.
A decrease in Investments will cause ____ shift in AD.
inwards or leftwards
Increased _____ should see an increase in output in a country, this will also cause an increase in aggregate demand and in real GDP.
Investment
Economic Growth only represents a number. Just because it looks like a country is doing great, it might just be because there is a big population, it does not show the _____? This is the reason why we need Real GDP per capita.
Possible impact on living standards
Draw a fully-labelled diagram to show the effect of economic growth using an AD/AS model
Diagram showing an increase in AD or increase in AS with full labels
It is an increase in production possibilities caused by factors including increases in the quantity and quality of resources, leading the PPC to shift ______.
outwards
Is it easy or challenging to convince businesses to invest? Explain your answer to the class.
challenging (business confidence)
What allows for greater output with fewer resources and/or inputs. However, because of this, many labour based jobs could be replaced by technology and become automated.
Productivity