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
• Inflatio...
Objectives
• Quick revision of Economic
growth
• Understand how to
generate economic growth
• Be able to explain the
cause...
What are?
• Economic growth
Increases in national output over
time, often measured by changes in GDP
• Potential economic ...
Objectives
• Quick revision of Economic
growth
• Understand how to
generate economic growth
• Be able to explain the
cause...
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 act...
An economy experiencing potential
growth, but not actual growth.
The potential is LRAS2, but economy has
not actually move...
A government attempting to
generate rapid short-term economic
growth by stimulating AD
What happens as the economy moves o...
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
cause...
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
cause...
Advantages of Economic Growth
• Rise in material standard of living of
households = more people can enjoy more
goods and s...
Disadvantages of Economic Growth
• “Jam today vs Jam tomorrow” =>
economy at full employment will have
to stop producing c...
Objectives
• Quick revision of Economic
growth
• Understand how to
generate economic growth
• Be able to explain the
cause...
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Economic growth

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Economic growth

  1. 1. 1.1 The Economic Cycle and Economic Growth
  2. 2. Unit 4 part 1 • The economic cycle and economic growth • Use of national income data to assess living standards • Inflation and deflation • Unemployment
  3. 3. 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
  4. 4. 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
  5. 5. 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
  6. 6. How can you generate economic growth?
  7. 7. 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.
  8. 8. 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?
  9. 9. A government attempting to generate rapid short-term economic growth by stimulating AD What happens as the economy moves onto the vertical LRAS?
  10. 10. An economy experiencing non- inflationary, actual economic growth. Move from AD1 to AD2 and then to AD3? Or not?
  11. 11. 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
  12. 12. Be able to explain the causes of economic growth
  13. 13. The fourth industrial revolution?
  14. 14. 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
  15. 15. 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?
  16. 16. 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…
  17. 17. 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

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