Economic growth and the economic cycle

nature of economic growth
1. LRAS
2. AD
3. PPC
4. trade cycle
5. potential
6. actual
causes of E.growth
1. increased labour activity/participation
2. economic stability
3. investment in physical capital
4. improved human capital
5. enterprise
Advantages and Disadvantages
1. A:rise in material living standards
  1. A:reduce/eradicate poverty
    1. A:provides enough for population
      1. higher tax revenue without raising tax rates = better public servicces?
        life and death in some countries
2. Dis.:higher material standards not necessarily make more happy
  1. Causes can affect outomes, inflation if caused by AD
    1. could be unequal distribution of gains
      1. composition of increased spending: spending more on guns is not better
        relative poverty can increase
        linked to unequal distribution of income and wealth, linked to more social &health problemts
Diagrams
1. PPC
2. Trade cycle
  1. kondratiev
  2. hysteresis
  3. accelerator/multipllier
  4. demand/supply side
Measuring growth
1. GDP doesnt account for quality improvements
2. GDP doesnt account distribution of gains
3. GDP doesnt account composition of growth
4. non monetised sector not accounted in gdo
5. negative externalities not accounted in gdp
6. alternatives
  1. mdp
  2. hdi
  3. misery index
sustainability
1. resources exhausted BUT this means rare resources are more profitable
2. environmental damage BUT voters can influence gov. policy
3. global warming threatens future

Resource summary

	Created by usman ahmed about 10 years ago