Economic Growth

latavae
Flashcards by latavae, updated more than 1 year ago
latavae
Created by latavae over 7 years ago
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HSC Economics (Economic Issues -3) Flashcards on Economic Growth, created by latavae on 28/09/2013.

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Economic Growth John Maynard Keynes theory of Aggregate Demand AD= C+I+G(X-M) I=Investment G=Government Spending X=Exports M=Imports Y=C+S+T C=Consumption S=Savings T=Taxation Y= Total level of income in an economy over a given period of time (National Income)
Y=AD S+T+M=I+G+X economy is at equilibrium Injection=Leakages (withdrawals) When : I>L - Upswing L>I - Downturn
Define Economic Growth Economic growth refers to the increase in volume of goods and Services produced in an economy in a year, measured by annual rate of change in Real GDP
Define Real GDP Refers to the percentage increase in value of goods and services produced in a year adjusted for inflation rate
Formulae for Economic Growth Real GDP Current yr - Real GDP Previous yr -------------------------------------------- Real GDP Previous yr
Formulae for Real GDP Nominal GDP x 100 ----------------------- CPI
What is the Simple multiplier Changes in AD influences economic Activity once equilibrium has been disrupted, economy will find a way to move to a new equilibrium
Formula's for Multiplier Process change AD x K = change in Y nat income to find K K=1/MPS or K=1/1-MPC
Source and effect of Economic growth Change in AD = Change in Economic Growth
What are the factors that influence AD and Economic Growth ? Consumption Investment Government Spending Export + Imports Domestic & Global Economic growth Domestic & global income levels Exchange rates Terms of Trade International Competitiveness
How does Consumption impact Eco Growth? 60% of AD determining economic growth through - Disposable income - Distribution of income - Consumer expectation - Level of Interest Rates
Discuss about Disposable Income Major factor that influences consumption if the level of income is high - Spending is High leading to consumption looks at APS + APC
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