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What is economic growth?
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An increase in goods and services or an increase in the production of goods and services in an economy, it is an increase in GDP. it is measured by GDP and expressed as a percentage change
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What is economic development?
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The ability to produce higher standards of living over time
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How do economic growth and economic development relate?
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Through a nations ability to produce goods and services it allows a nation to satisfy the unlimited wants go the people of the country.
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What are some examples of economic development?
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-education:new school facilities or increased literacy facilities -improved housing: sanitation and water-infrastructure: roads, hospitals, telecommunication systems
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What are 3 different concepts of growth (how is it measured)?
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Real income, productive capacity, net social welfare
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What is real income?
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Refers to the actual output of an economy i.e. the total number of goods and services produced by an economy
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What is productive capacity?
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A measure of an economy's economy potential, rather than looking at the actual output of an economy (real income). The organisation for economic co-operation and development measures economic potential and compares it to the actual performance in its 'output gaps' statistics. e.g. if there is a decrease in unemployment it indicates economic growth. an output gap is the difference between an economy's actual and potential gdp
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What is net social welfare?
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Focuses on economic factors (output of goods and services) as well as non economic factors such as quality of life factors including consideration of the environment, entertainment and facilities provided by the central government e.g. health and education. one measure that attempts this wider view is the human development index
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What does the frontier of ppf reflect
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Maximising resources
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What are the three components of the hdi?
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Health (life expectancy)education (average years of schooling and expected years of schooling)living standards (gross national income per capita)
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What is the HDI?
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A complex index to measure socio-economic progress of a country and is useful for comparing countries. It is measured from 0-1
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Why do we need a HDI?
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To measure the average achievements of a country which is their human development in the areas of health, education and living standards to allow humans to fulfil their lives without degrading the planet
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What does the HDI include?
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Life expectancy at birth, mean years of schooling, expected years of schooling, gross national income per capita, GNI per capita minus HDI rank and non income HDI value
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What happens if actual GDP is a little higher than the estimated GDP?
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Economy is outpacing growth trend rate, risking higher inflation
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What does an increase in productive capacity mean?
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There is more investment in the economy and so there are more capital goods available for production, but as we add new capital goods (new machines and factories), old ones are wearing out
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