Flashcards
gs topic 1
Flashcards do conjunto (11)
- 1Define the term Gross Domestic Product (GDP)measures the monetary value of goods and services produced within a country for a given period of time, usually a year.
- 2Components of GDPConsumption Expenditure (C): refers to total spending on goods and services by individuals and households in an economy
Investment Expenditure (I): refers to capital expenditure of firms which is used to further production and expand the economy's productive capacity
Government Expenditure (G): refers to total consumption and investment expenditure of the government
Net Exports (X-M): refers to the difference between the value of a country's exports and imports - 3GDP formulaGDP = C + I + G + (X-M) = Aggregate Demand
- 4Aggregate Demand & Aggregate Supply vs GDPAccording to economic theory, Aggregate Demand (AD) takes GDP and shows how it relates to price levels. Quantitatively, Aggregate Demand and GDP are exactly the same
Aggregate Demand (as well as Aggregate Supply) represent the total/aggregate demand and supply of goods and services that are available at all possible price points within an economy. The intersection of AD and AS shows the equilibrium price point and the real GDP of the economy (which is national income, Y) Any shift in AD or AS has an impact on the real GDP and the price level - 5Define Economic GrowthEconomic growth is the increase in the level of national output, that is the annual percentage of change in GDP. Hence, in theory, any increase in the components of GDP (C, I, G, or [X-M]) can cause economic growth.
An increase in the quality and/or quantity of the factors of production (land, capital, labor and enterprise) can also create economic growth - 6Causes of Economic GrowthFactors endowment: quality and quantity of a country's factors of production, such as resources, land etc
Labour force: Size, skills and mobility of the economy's workforce has an impact on the country's economic growth
Labour productivity: the amount of goods and services that workers produce in a given tome period. It is often referred to as output per worker, expressed as a monetary value (GDP divided by the country's labour force)
Investment expenditure: Investment and spending on capital resources such as use of computers in productions, equipment etc - 7Advantages of Economic GrowthImproved standards of living: growth tends to lead to higher standards of living for the average person
Employment: growth tends to lead to higher levels of employment in the country
Tax revenues: growth is associated with higher levels of spending in the economy. This generates more tax revenues for the government. - 8Disadvantages of Economic GrowthEnvironmental consequences: high rates of economic growth can create negative externalities such as pollution (China), congestion (Singapore), climate change and land erosion.
Risk of Inflation: if economy grows due to excessive demand in the economy, there is a danger of demand-pull inflation - negative consequences on the economy (Notice that the General Price level increases when AD increases, on the AD-AS model)
Inequalities in income and wealth: creates disparities in the distribution of income and wealth - the rich gets richer and the poor gets poorer
Resource depletion: growth often involves using up the world's scarce resources at rates that are unsustainable - 9Measuring Economic Growth through GDP per capitaA better way to measure standard of living as it takes into account the economy's entire population
Eg. China might be the world's second largest economy at US$10,736 bullion, but with a high population, it only has a GDP per capita of US$7808 in 2015. By comparison, Singapore has a GDP of US$293 billion, but a GDP per capita of US$53,004 in 2015. - 10Measuring Growth through HUMAN DEVELOPMENT INDEX (HDI)Composite indicator that looks at factors beyond GDP (per capita)
It measures three dimensions of development (including income levels): Healthcare - life expectancy, Education - mean years of schooling, Income levels - refer to GDP per capita - 11Limitations of using HDI to measure growthQualitative factors such as gender inequalities and human rights are ignored by HDI
HDI does not take into account income distribution
HDI ignores environmental issues
HDI does not interpret living standards in accordance to cultural differences etc
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- Descrição
- Year 3 Global Studies FlashCards sobre gs topic 1, criado por ALEXIS LEI YEE FAYE 3T em 13-09-2017.
- Criado por
- ALEXIS LEI YEE FAYE 3T
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