Economic Growth and Development Quiz

Economic Growth vs. Development

• Economic Growth measures the value of goods and services produced over a period, focusing on indicators like GDP.
• Economic Development measures human welfare, encompassing health, education, and income distribution; uses the Human Development Index (HDI).

The Poverty Cycle

• The Poverty Cycle describes how poverty persists across generations. Factors include:
  • Low Income: Limited ability to afford essentials like education and healthcare.
  • Low Productivity: Poor health and education reduce workforce efficiency.
  • Low Economic Growth: Lack of resources hinders investments, perpetuating poverty.
• Breaking the cycle requires investments in education, healthcare, and infrastructure.

Patterns in Growth/Development (Choropleth Maps)

• Choropleth maps illustrate development patterns visually, using colors to indicate:
  • Income levels.
  • Access to resources.
  • Population density and urbanization.
• Less Economically Developed Countries (LEDCs) often show disparities due to historical factors (e.g., colonial history), resource availability, and infrastructure.

Four Factors of Production

• Land: Natural resources (minerals, forests).
• Labor: The human workforce.
• Capital: Machinery, buildings, tools.
• Entrepreneurship: Innovation and risk-taking.
• These interact to produce goods and services, with productivity influenced by investment and education.

Externalities of Production and Consumption

• Positive Externalities: Benefits extend beyond the immediate producer/consumer:
  • Production: Factories using renewable energy improve air quality (benefits nearby community).
  • Consumption: Vaccinations improve public health for the entire community.
• Negative Externalities: Costs extend beyond the immediate producer/consumer:
  • Production: Factories emitting CO2 cause global warming (impacts entire planet).
  • Consumption: Smoking increases healthcare costs for society (impacts health system).

Poverty

• Poverty: General state where individuals experience disadvantages, including low income, poor housing, and inadequate healthcare. This can cause social exclusion and limit access to fundamental rights.
• Absolute Poverty: Defined by inability to meet basic needs (food, clothing, shelter). Usually measured against a specific monetary threshold (e.g., less than $2.15/day).
• Relative Poverty: Measures income inequality within a society by comparing incomes to the median income in that country. An income less than 60% of the country's median income is considered relatively low.

Economic Development

• A process that improves a nation's economic, political, and social well-being.
• Standard of Living: Level of wealth, comfort, material goods, and necessities available to a person or community.
• Human Development Index (HDI): Measures a country's achievements in health (life expectancy), education (years of schooling), and standard of living (GNI per capita).

Factors of Production

• Land: All natural resources used in production.
• Labor: The human effort expended in production.
• Capital: Physical assets (machinery, buildings, infrastructure) used in production.
• Entrepreneurship: The ability to innovate and take risks in creating new products or businesses.

Externalities

• Externality: A side effect of an action affecting parties not directly involved.
• Positive Externality: Benefits experienced by others. Example: vaccinations reducing the spread of a disease.
• Negative Externality: Costs imposed on others. Example: factory pollution harming nearby residents.