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Economic Growth and the Business Cycle

Terms in this set (36)

Demand Factors: increases in...
Supply Factors: the quantity and quality of productive resources
• Land
o Trade
o Exploration
o Reclamation
o Scientific techniques
o Fertilisers
o Irrigation
o Organic farming
• Labour: Increasing the quantity of human resources leads toe economic growth because a) labour is a productive resource and b) more people demand more goods and services
o Human Capital: the accumulated stock of knowledge and skills held by the population - increases in this leads to higher economic growth
o Natural increases through migration: creates both supply of labour and demand for goods and services. And adds to the level of education, training and skills.
o Training and further education: increases human capital
o Improved health
o Multiskilling
• Capital
o Social Overhead/public Investment: it creates a framework on which economic activity is founded
• Roads, schools hospitals provide a foundation for private sector productivity
o Private Investment: includes buildings, machinery and equipment - to produce final goods and services for a profit
o Capital Widening: capital is widened when it grows in proportion to other productive resources
• As population grows there is a need to increase stock of capital (more houses, more roads etc.)
o Capital Deepening: increase in capital relative to the stock of other productive resources - causing production to become more capital intensive
• Capital deepening increases productivity - making it possible for the workforce to produce a larger output
o Technological Progress - changes in scientific and technical knowledge which involves new discoveries and new techniques and the application of these to the production process
o Research and Development (R&D): developing and applying production process and innovation
o Savings
• Enterprise
o Foreign investment
o Management training
o Innovation
o Cost management