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Key statistic to measure economic growth internationally?
Change in Real GDP per Capita
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What does an output gap represent?
Waste of resources arising from unemployment of scarce resources
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Long term average increase in GDP?
Trend rate of economic growth
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What will cause a rise in equilibrium national output?
An increase in Aggregate Demand
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When will supply side policies need to be considered?
When trying to boost long term economic growth
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When trying to generate long term economic growth, boosting AD alone will be what?
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6 Causes of economic growth?
1.Economic stability and sound macroeconomic policies 2.Increasing labour activity/participation 3.Increasing labour productivity 4.Investment in physical capital 5.Improved human capital - education/training 6.Enterprise
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5 Factors that led to increases in the activity rate?
1.More relaxed social attitudes to women 2.Emergence of flexible working practices, including part time working 3.Incentives in the tax system Eg. Working tax credit 4.Tougher benefits system 5.Retraining schemes to help overcome occupational immobil
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2 Factors that have countered the increasing activity rate?
1. Trend towards early retirement 2.Increasing proportion of young people in higher education
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Potential source of economic growth?
Inward migration of workers
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2 Factors behind boosting productivity?
1.Improvements in physical capital 2.Improvements in human capital
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4 Elements of modern supply side economics?
1.Lower taxation of business profits & business wealth 2.Tax relief for high spending on research & development 3.Promoting links between businesses & universities 4.Reforming trade union legislation, to make businesses easier to manage
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4 More elements of modern supply side economics?
1. Privatisation, opening up businesses to stock exchange discipline & sources of finance 2.Tougher competition policy 3.Encouraging foreign investment into the UK 4.Encouraging macroeconomic stability
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An educated workforce will be....?
More productive and help generate economic growth. Will have a strong future as economic growth will need a flexible labour force
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3 Advantages of economic growth?
1.Rise in material standard of living of households as GDP per capita increases 2.Reduces absolute poverty 3.Raises tax revenue w/o raising tax rates. Revenue can be used to provide public & merit goods
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4 Disadvantages of economic growth?
1.In short run, fewer consumer goods & services produced 2.May be at expense of negative externalities like environmental damage 3.May be upheaval & stress as people forced to acquire new skills or change jobs
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7 Difficulties in using GDP as a measure of living standards?
1.Incompletely measures output 2.Ignores quality improvements 3.Distribution of income 4.Ignores amount & value of leisure 5.Negative externalities 6.Figures ignore what's being produced 7.Comparing national income between countries
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4 Alternatives to National Income as a measure of economic welfare?
1.Human Development Index 2.Human Poverty Index 3.Measure of Domestic Progress 4.Misery Index
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Human Development Index is calculated from the average of 3 indicators?
1.Standard of living, measured by real GNP per capita 2.Life expectancy at birth, in years 3.Educational attainment, measured by weighted average of adult literacy & enrolment ratio in schools and colleges
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4 Dimensions of human life the Human Poverty Index emphasises?
1.Longevity 2.Knowledge 3.Economic Provision 4.Social Inclusion
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3 Things the Measure of Domestic Progress measures?
1.Using GDP as a measure of living standards 2.Social & environmental costs of growth 3.Benefits of unpaid work like household labour
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How is the Misery Index calculated?
Adding unemployment rate to the inflation rate
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3 Main threats to sustainability?
1.Exhaustion of resources 2.Environmental damage 3.Global warming
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3 Solutions to exhaustion or resources?
1.Cause consumers to change their behaviour Eg. More fuel efficient cars 2.Increases in supply of Eg. Oil as firms profit by exploiting new, expensive oil fields 3.Firms profit from investing resources in substitute technologies Eg. Solar Power
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4 Phases of the economic cycle?
1.Recovery 2.Boom 3.Downturn 4.Recession
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5 Explanations of the economic cycle?
1.Speculative bubbles 2.Changes in inventories 3.Political cycles 4.Outside shocks 5.Multiplier/Accelerator model
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Card 2


What does an output gap represent?


Waste of resources arising from unemployment of scarce resources

Card 3


Long term average increase in GDP?


Preview of the front of card 3

Card 4


What will cause a rise in equilibrium national output?


Preview of the front of card 4

Card 5


When will supply side policies need to be considered?


Preview of the front of card 5
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