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:smiley: CH 10: Economic Growth :smiley: (Recession (Effects of Recession,…
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CH 10: Economic Growth
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Recession
Technical Recession:
Two Consecutive Quarters
of Negative Growth
Economic Recession: A
Sustained
period of
Negative
Economic Growth
Effects of Recession
Loss of Output and Welfare
Increased Unemployment
Strain on Government Budget
Negative Outlook and Pessimism
Deflationary Spiral
Economic Growth: An increase in the
real National Output
of a country
over a period of time
Actual Growth: Percentage annual increase in
national output
actually produced or
equilibrium national income
^ AD/SRAS --> ^ SR Actual Growth
Rightward shift of AD/Downward shift of SRAS/Outward Movement of Production Point
Potential Growth: The Rate of Growth of Potential Output, determined by the increase in the LRAS
Rightward shift of LRAS/Outward Shift of PPF
Sustainable Growth: Rate of Growth that can be maintained in the Long Term without creating
other significant economic problems
, particularly for future generations i.e. a
positive
and
stable
growth rate over an
extended
period of time
Inclusive Growth: Economic Growth that creates
opportunity for all
segments of the population and
distributes
the dividends of increased prosperity, both in monetary and non-monetary terms,
fairly across society
.
Measures
Growth and Development
Inclusion
Intergenerational Equity and Sustainability
Economic Development:
Economic Growth
and
qualitative improvement
in the SOL. It involves changes in the
economic, social and political
structure of a country.
Measures
Economic: Measures Material SOL
Non-Economic Measures Non-Material SOL
Supply Side Factors: QQT of FOP
Increase in Quantity
Labour Force
Availability of Natural Resources
Capital Stock: Physical Capital and Economic Infrastructure
Increase in Quality
Labour Productivity
Land Productivity
Capital Efficiency
Improvement in Technology
Invention
Innovation
Demand Side Factors
C + I + G + (X - M)
Increases Actual Output
Structural Factors
Cultural
Social
Political
External Factors
Economic growth dependent on the growth of foreign economies, due to the relation of exports
Policies
Fiscal Policy
Investment
Tax Concessions
Government Expenditure on Infrastructure
Governement Expenditure on Human Capital
Technological Improvements
Educational Facilities
Tax Incentives for Foreign Investment
Tax Incentives for Research and Development
Monetary Policy
Interest Rates
Exchange Rates
Aggregate Supply Side Policies
Human Capital
Infrastructure
R&D
Consequences of Economic Growth
Benefits
Increased Consumption --> ^ SOL
Helps to avoid other Macroeconomic Problems
Easier Redistribution of Incomes
Care for Environment
Costs
Current Opportunity Cost: Current Consumption
Envirnomental Costs and Depletion of Non-Renewable Resources
Income Inequality
Unemployment
Social Effects
BOP Defecit