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Questions and Answers
What is economic growth primarily defined as?
What is economic growth primarily defined as?
What is one of the main features involved in economic growth?
What is one of the main features involved in economic growth?
What is an example of structural transformation in economic growth?
What is an example of structural transformation in economic growth?
What is expansion of productive capacity in economic growth?
What is expansion of productive capacity in economic growth?
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What does an increase in real GDP measure?
What does an increase in real GDP measure?
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What is one of the prominent theories of economic growth?
What is one of the prominent theories of economic growth?
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What does Classical Growth Theory emphasize?
What does Classical Growth Theory emphasize?
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What is a limitation of economic growth according to Classical Growth Theory?
What is a limitation of economic growth according to Classical Growth Theory?
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Study Notes
Economic Growth
- Economic growth is an increase in the production of goods and services available in an economy, reflecting the degree of productivity.
- Three main factors involved in economic growth are:
- Technology
- Labour
- Capital
Definitions of Economic Growth
- Enhanced Quality of Life: improved education, healthcare, infrastructure, and overall well-being of the population.
- Structural Transformation: shift from agriculture to industry and services, with improvements in productivity and efficiency across sectors.
- Expansion of Productive Capacity: expansion of a country's productive capacity, enabling the production of more goods and services over time through investments in capital, technology, and human resources.
- Rise in Per Capita Income: increase in average income of citizens, reflecting improvements in living standards.
- Increase in Real GDP: increase in a country's real Gross Domestic Product (GDP), measuring the value of all goods and services produced within a given period, adjusted for inflation.
Theories of Economic Growth
- Classical Growth Theory:
- Pioneered by Adam Smith, David Ricardo, and Thomas Malthus.
- Emphasizes the role of capital accumulation, labour, and technological progress.
- Posits that economies grow through investment in capital, but growth is ultimately limited by diminishing returns and population growth.
- Neo-Classical Growth Theory:
- Developed by Robert Solow and Trevor Swan in the 1950s.
- Focuses on the roles of capital accumulation, labour force growth, and technological progress.
- Endogenous Growth Theory:
- Developed in the 1980s by Paul Romer and Robert Lucas.
- Emphasizes that economic growth is primarily the result of endogenous (internal) factors such as human capital, innovation, and knowledge rather than external ones.
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Description
Learn about the definition and key features of economic growth, including technology, labor, and capital. Explore how it impacts the quality of life and structural transformation.
