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Economic growth
 

Economic growth

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    Economic growth Economic growth Presentation Transcript

    • 1.1 The Economic Cycle and Economic Growth
    • Unit 4 part 1 • The economic cycle and economic growth • Use of national income data to assess living standards • Inflation and deflation • Unemployment
    • Objectives • Quick revision of Economic growth • Understand how to generate economic growth • Be able to explain the causes of economic growth • Examine the advantages and disadvantages of economic growth
    • What are? • Economic growth Increases in national output over time, often measured by changes in GDP • Potential economic growth Growth in the productive potential of an economy • Actual economic growth The extent to which economies grow to their potential
    • Objectives • Quick revision of Economic growth • Understand how to generate economic growth • Be able to explain the causes of economic growth • Examine the advantages and disadvantages of economic growth
    • How can you generate economic growth?
    • Over to you 1 • Using an AS/AD diagram, illustrate the following: 1. An economy experiencing potential growth, but not actual growth. 2. A government attempting to generate rapid short-term economic growth by stimulating AD 3. An economy experiencing non- inflationary, actual economic growth.
    • An economy experiencing potential growth, but not actual growth. The potential is LRAS2, but economy has not actually moved there yet. How could this happen?
    • A government attempting to generate rapid short-term economic growth by stimulating AD What happens as the economy moves onto the vertical LRAS?
    • An economy experiencing non- inflationary, actual economic growth. Move from AD1 to AD2 and then to AD3? Or not?
    • Objectives • Quick revision of Economic growth • Understand how to generate economic growth • Be able to explain the causes of economic growth • Examine the advantages and disadvantages of economic growth
    • Be able to explain the causes of economic growth
    • The fourth industrial revolution?
    • Objectives • Quick revision of Economic growth • Understand how to generate economic growth • Be able to explain the causes of economic growth • Examine the advantages and disadvantages of economic growth
    • Advantages of Economic Growth • Rise in material standard of living of households = more people can enjoy more goods and services • Difference between developing and developed world? • Reduce or eliminate absolute poverty • More tax revenue for same tax rates means more finance for important public and merit goods and to reduce negative effects on the environment • Greater political power. Shift from USA to China?
    • Disadvantages of Economic Growth • “Jam today vs Jam tomorrow” => economy at full employment will have to stop producing consumer goods to invest in capital goods • Negative externalities => pollution • Increased inequalities as gap between rich and poor increases • Threat to traditional ways of life => does greater prosperity = greater happiness? Maslow…
    • Objectives • Quick revision of Economic growth • Understand how to generate economic growth • Be able to explain the causes of economic growth • Examine the advantages and disadvantages of economic growth