Economic Performance

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  • Created by: GAIngham
  • Created on: 05-03-14 10:24
Define economic problem
when we have unlimited wants and needs but have limited resources in which we need to fulfill these needs and wants
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Define opportunity cost
the next best alternative foregone
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define economic growth
a long-term expansion of the productive potential of the economy
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How is economic growth achieved?
by increasing one or more of : - the quantity of resources through investment - the quantity of resources through training - improving technology and the use of existing resources
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what is the trend rate of economic growth?
the trend rate is the rate of output which can realistically be achieved over a long period. in the uk it has been between 2.2% per year. it is a moving average of growth rates over a period of time
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what is the actual rate of economic growth?
the actual rate of economic growth shows the performance of the economy at a particular point of time. it is sometimes below the trend rate and sometimes above the trend rate
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define short run economic growth
it is a rise in real GDP. In the short term, economic growth in the economy is caused by an increase in AD. if there is spare capacity, in the economy then an increase in AD will cause a higher level of real GDP
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AD can increase because?
- lower interest rates - increased wages - increased govt spending- a fall in the exchange rate-lower taxes- an increase in investment spending
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define long term economic growth
an increase in the potential output of an economy
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LRAS or potential growth can increase because?
- increased capital - increase in labour productivity- discovering new raw materials - technological improvements to improve productivity of capital and labour
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Other cards in this set

Card 2

Front

Define opportunity cost

Back

the next best alternative foregone

Card 3

Front

define economic growth

Back

Preview of the front of card 3

Card 4

Front

How is economic growth achieved?

Back

Preview of the front of card 4

Card 5

Front

what is the trend rate of economic growth?

Back

Preview of the front of card 5
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