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ECONOMIC GROWTH AND THE
ECONOMIC CYCLE

KEY TERMS

RECESSION: Negative economic growth over two successive quarters
ECONOMIC GROWTH: An increase in the real output of the economy
LONG TERM GROWTH RATE: The average rate of economic growth sustained over a period of time
REAL GROSS DOMSTIC PRODICT PER CAPITA: The…

Page 2

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Defined as an increase in the real output of the whole economy. UK longterm growth rate is 2.5% a year

Measured by a change in real GDP per capita ­ represents value of all income or expenditure or output generated in the
UK economy in a year, adjusted for inflation…

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Rise in material standard of living
Enables a country to reduce/remove absolute poverty
Raises tax revenue without raising taxes, some can be used to finance schemes for poor
Tax revenue can be used to provide public services and merit goods, also to correct negative externalities

COSTS OF ECONOMIC GROWTH

Opportunity…

Page 4

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MEASURE OF DOMESTIC PROGRESS: Published by new economics foundation ­ reflection of how closely GDP
reflects progress of quality of life in Britain. Factors in social and environmental costs of growth and benefits of unpaid
work. UK GDP has increased 80% over 3 decades but social costs have increased and…

Page 5

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Outside Shocks: Are exogenous from outside our economy ­ affect AD and supply socks affecting AS. May bring both
demand side and supply side shocks e.g. storm damage caused by hurricane activity has led to reduced demand in
southern US states and affect supply of rude oil, raising price and…

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davidsalter

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This is 6 pages which cover all aspects of economic growth up to AS standard. Includes measurement, causes, problems etc.

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