2.5.4 The impact of economic growth

What is a benefit of economic growth for consumers regarding income and wealth?

Increased income and wealth, typically leading to higher income levels.

Give an example of increased income and wealth for consumers due to economic growth.

Rapid economic growth in China has lifted millions out of poverty and into the middle class.

How does economic growth improve the quality of goods and services for consumers?

Higher incomes lead to greater demand for better quality goods and services.

Give an example of improved quality of goods and services due to economic growth.

Technological advancements leading to improved smartphones, healthcare, and education.

How does economic growth affect employment opportunities for consumers?

Growth leads to job creation, reducing unemployment rates.

Give an example of greater employment opportunities from economic growth

Expansion of the technology sector has created numerous job opportunities.

What is a cost of economic growth for consumers related to inflation?

Rapid growth can lead to inflation, eroding purchasing power.

Provide an example of inflation eroding consumer purchasing power.

Hyperinflation in Zimbabwe in the late 2000s reduced consumer purchasing power drastically.

How can economic growth negatively affect income distribution for consumers?

Benefits of growth may not be evenly distributed, leading to greater income inequality.

Example of economic growth leading to income inequality.

Economic growth in the U.S. has led to rising income inequality since the 1980s.

What is a benefit of economic growth for firms related to profits?

Higher profits due to increased consumer spending boosting sales.

Example of higher profits from economic growth.

Booming e-commerce has significantly increased profits for companies like Amazon.

How does economic growth benefit firms through economies of scale?

Firms can expand and achieve lower costs per unit due to larger scale production.

Example of economies of scale benefiting firms.

Automotive industry benefits from large-scale production reducing costs per vehicle.

How does economic growth encourage innovation and investment in firms?

Growth encourages firms to invest in new technologies and innovation

Example of innovation and investment from economic growth.

Investment in renewable energy technologies by firms like Tesla.

What is a cost of economic growth for firms related to competition?

Increased competition as more firms enter the market.

Example of increased competition due to economic growth.

Entry of new tech firms increases competition for established companies like Microsoft and Apple.

How can economic growth lead to resource depletion affecting firms?

Rapid growth can lead to overuse of natural resources, increasing long-term costs.

Example of resource depletion caused by economic growth.

Deforestation in the Amazon due to increased agricultural and industrial activities.

What benefit does economic growth provide governments in terms of tax revenue?

Higher tax revenues as economic growth increases incomes and corporate profits.

Example of higher tax revenues during economic growth.

Economic boom periods lead to increased tax collections, as seen in the late 1990s in the U.S.

How does economic growth benefit government investment?

Higher revenues allow for greater investment in public infrastructure and services.

Example of increased public investment due to economic growth.

Improved transportation networks and healthcare systems in developed countries.

What inflation-related challenge can governments face during rapid economic growth?

Inflationary pressures become challenging to manage.

Example of government action to manage inflation during growth.

Governments implementing tight monetary policies to curb inflation during economic booms.

What environmental cost can economic growth impose on governments?

Environmental degradation such as pollution and environmental damage.

Example of environmental degradation linked to economic growth.

Industrial pollution in rapidly growing economies like China and India.

How does economic growth benefit living standards?

Growth leads to better healthcare, education, and overall quality of life.

Example of improved living standards due to economic growth.

Increased life expectancy and literacy rates in countries experiencing sustained growth.

How do technological advancements related to growth impact living standards?

Innovations improve efficiency and quality of life.

Example of technological advancements improving living standards

Advancements in medical technology improving health outcomes.

What environmental cost of economic growth affects future living standards?

Environmental degradation impacting sustainability

Example of environmental sustainability concerns linked to economic growth.

Climate change impacts due to greenhouse gas emissions from industrial activities.

How can resource exhaustion due to economic growth impact future generations?

Overuse of natural resources can lead to scarcity

Example of resource exhaustion caused by economic growth.

Overfishing leading to depletion of fish stocks in oceans.