Using a demand and supply curve, explain what happens to the demand for labour during an economic recession.
Measuring economic growth In order to measure economic growth between two years, we calculate the GDP figure for each year and find the percentage change from Year 1 to Year 2.
Calculating changes in GDP
Example: GDP Year 1 = 200 billion GDP Year 2 = 210 billion Formula:
Change in GDP Year 2 –––––––––––––– GDP Year 1
100 10 200
X –––– = –––– X –––– = 5% 1
100 1
Benefits of economic growth Economic growth is seen as one of the most important measures of an economy’s performance because it: Lowers unemployment
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With more goods being produced, more people will be employed. This has a positive impact on the economy. Increases living standards Living standards refer to the level of wealth and material goods available to people in a country. A growing economy generally means there are more goods available for people to buy. More people need to be employed to make these goods, so more people can afford to buy them. Increases money for government services An increase in the number of people working and buying goods leads to an increase in the money received by the government through taxes on income and sales. This allows the government to improve public goods and services such as roads and schools.
Achieving economic growth
There is a lot of debate among economists about how countries should achieve economic growth. Each country has their own set of circumstances which make it difficult to apply general rules to all countries. However, factors that can help to promote economic growth include:
