Topic 2.14 - Impacts of economic growth

What are the 4 reasons why countries want economic growth?

1. An increase in AD

2. More production needed leading to lower unemployment

3. A rise in GDP

4. More profits and higher wages means more tax rev

What are the 4 negative side effects to economic growth?

1. Environmental damage

2. Depletion of resources

3. Demand for imports increasing so x-m decreases

4. Increasing inequality of income and wealth

What do we assume will happen if there is a higher GDP?

Better quality of life

How would growth in national income effect food?

• More

• Better quality

How would growth in national income effect housing?

• Bigger

• Better quality

• Improved neighbourhood

How would growth in national income effect leisure and travel?

More variety

How would growth in national income effect health?

• More healthy

• Better quality health system

What does an increase in real GDP mean for the rich and poor?

More national income and those who were already rich tend to do better than those who were not e,g, higher skilled jobs will give greater wages than those in lower skilled

What does an increase in real GDP mean for households?

Those who can own more property and shares will gain more wealth and owners of companies will receive profit

What is the main reason as to why income and wealth increases when GDP does? What problems does this cause?

Inequality, leading to problems like increased social unrest, crime and so higher government spending is needed

Why should economic growth be beneficial to consumers?

Will be able to afford a greater level of consumption

Why should economic growth be negative for consumers?

May cause inflation meaning price rises

Why should economic growth be beneficial to firms?

Will bring in a greater level of profit due to rising sales

Why should economic growth be negative for firms?

Resources become more costly

Why should economic growth be beneficial for governments?

Creates more tax revenue for public services

Why should economic growth be negative for governments?

Need to spend more due to rising inequality and environmental damage

Why should economic growth be beneficial for living standards?

Improvement to all groups due to higher incomes

Why should economic growth be negative for living standards?

In the future they will be endangered by inflation, rising inequality, rising imports and environmental impacts