In this case, we get economic growth without inflation. High inflationary growth is unsustainable and is usually followed by a recession. Holland. That creates an asset bubble. Current account deficit d. application of science to problems of economic production. 120. False 8. a) 1/ b) 1 apple 9. Four of these are typically grouped under supply factors which include natural resources, human resources, capital goods and technology. The benefit or value that was given up can refer to decisions in your personal life, in a company, in the economy, in the environment, or on a governmental level. It spent $600,000 on labor, $150,000 on capital and $200,000 on materials. It is also capable of spawning new economic growth. C 2. A 4. 3. Self-Check Questions. increase in real GDP of an economy. Loss of land:Increased economic growth results in loss ofavailable land20 21. Key: 1. Main Costs of Economic Growth. Opportunity cost is the value of something when a particular course of action is chosen. Risks of higher inflation and higher interest rates. c.* high rates of saving and investment. This is when the economy is growing in a sustainable fashion. 66. Economic Growth. Boom and bust economic cycles. Determinants of economic growth are inter-related factors that directly influence the rate of economic growth i.e. b. a rapid decline in population growth rates. False 5. The best phase is expansion. A firm had sales revenue of $1 million last year. Rapid rates of GDP growth can bring about undesirable economic and social costs – much depends on the nature/causes of growth. Opportunity Cost 7. For example, in the UK in the period 1992-2007, low inflation helped economic growth to be more stable – than the previous boom and bust cycles. The economy would experience the most future economic growth if it chooses to maximize the production of a) Consumption goods b) Capital goods c) Services d) None of the above; corn. For example, between 1993 and 2007, both economic growth and inflation were at a sustainable rate. But as muchas benefits we receive from this growth there arethe costs and circumstances which cannot beignored.21 22. 4 computers. C 10. 67. Economic growth: If an economy can raise the rate of growth of productivity then the trend growth of national output can pick up. It measures all the aspects which include people in a country become wealthier, healthier, better educated, and have greater access to good quality housing. 23 D 3. The Phases of Economic Growth . The bill cost $1.5 trillion and is designed to increase economic growth for the next ten years. According to Kuznets, the identifying characteristic of "modern economic growth" is a. expansion of heavy industry. Analysts watch economic growth to discover what stage of the business cycle the economy is in. 3. Sir William Petty (1676 [1899]) assessed the economics of war and of immigration in terms of skills (and wages) of individuals. Economic growth is important for every countryto cope with the developing world. There are six major determinants of growth. Economic Development is the process focusing on both qualitative and quantitative growth of the economy. In this diagram we have AD increasing at the same rate as LRAS. C 6. of the workforce has a long history in economics, and the history helps to explain a number of the issues that are pertinent to today’s analysis of economic growth. Simply put, the opportunity cost is what you must forgo in order to get something. However, if economic growth is at a sustainable rate, this will not occur. By keeping inflation low, it enables a long period of sustainable economic growth. 22 23. 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