Economic Growth and Sustainability

Chapter 35

Economic Growth

Change in value of goods and services produced in a country from one year to the next

Gross Domestic Product (GDP)

Total value of goods and services produced in a country in any one year - both Irish and foreign-owned companies located in Ireland

Gross National Product (GNP)

Total value of all goods and services produced by Irish companies or individuals both in Ireland abroad

Calculating Economic Growth

(Change in value production between year 1 and year 2) ÷ Value of production in year 1

The Economic Cycle

1. Boom

2. Recession

3. Depression

4. Recovery

Economic Boom

A period of substantial economic growth in an economy over a period of time.

What happens during an Economic Boom?

• Wage levels rise

• Production increases

• Prices increase

Recession

Economic activity has dropped considerably over a number of months

What happens during a recession?

• Production slows down

• Employment levels fall

• Government income falls

• Some firms close down

• Inflation falls

Depression

A recession that lasts for a considerable time and results in a long-term reduction in the level of production of goods and services in a country

Recovery