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Chapter 10: Economic Growth (causes (Supply side factors (Increase in the…
Chapter 10: Economic Growth
recession
Economic recession
Technical recession
Problems of recession
increased unemployment
loss of output and welfare
strain on government budgets
negative outlook and pessimism
may cause deflationary spiral
inter-generational equity and sustainability
growth and development
inclusion
types of growth
Sustainable growth
Economic growth
Actual growth
Potential growth
Inclusive growth
Economic development
measurement of economic development
economic indicators
non- economic indicators
causes
Demand side factors
Supply side factors
Increase in the quality of factors of production
Increase in labour productivity
Increase in land productivity
Increase in capital efficiency
Increase in the quantity of factors of production
Increase in availability of natural resources
Increase in labour force
Increase in capital stock:
investment in physical capital and economic infrastructure
Increase in the level of technology
Structural factors
External factors
Impacts
Benefits
Avoids other macroeconomic problems
Enables easier redistribution of incomes
Increased levels of consumption, leading to higher standards of living
Society can afford to care more for the environment
Costs
Environmental costs and depletion of non-renewable resources
Effects on income redistribution
Current opportunity cost of growth
Effects on employment
Social effects
Impact on Balance of Payment
Policies to encourage economic growth
Aggregate supply policies
Fiscal policy
Policies to encourage investment
Policies to encourage technological improvements
Monetary policy