2.7 Economic Growth
By the end of this unit you should be able to:
- Use a PPC curve to explain how movement from a point inside a PPC curve to a point on a PPC curve illustrates economic growth
- Use a PPC curve to explain how an outwards shift in a PPC curve illustrates economic growth
- Use an LRAS diagram to explain how an outwards shift in the LRAS curve illustrates growth
Economic growth has also attracted attention because of the positive impact it has on society, as it has been associated with benefits such as increased wealth and standards of living among others. Aggregate growth is possibly the single most important factor influencing individual income levels. However, economic growth has also had negative impacts on society.
POSITIVE IMPACTS
Generally, economic growth is good for the welfare of an economy. However, it tends to create both winners and losers. History tells us that countries that develop will experience negative consequences along the way. China today has seen a rapid increase in its GDP over the past 30 years, but this come at a price. Exploitation of natural resources and labour has been well publicized, but in the long-run the standard of living for the majority of the population has improved notably.
NEGATIVE IMPACTS
POSITIVE IMPACTS
- Improved living standards
- Reduction in poverty
- Education
- Improved technology and infrastructure
- Health
Generally, economic growth is good for the welfare of an economy. However, it tends to create both winners and losers. History tells us that countries that develop will experience negative consequences along the way. China today has seen a rapid increase in its GDP over the past 30 years, but this come at a price. Exploitation of natural resources and labour has been well publicized, but in the long-run the standard of living for the majority of the population has improved notably.
NEGATIVE IMPACTS
- Health Challenges
- Increase in Income Inequality
- Increased Pollution
Sample classroom activities
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Useful videos
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