9708 · 9.2
Economic growth and sustainability flashcards
Revision flashcards for Cambridge 9708 Economic growth and sustainability (syllabus 9.2). Flip, recall, then mark a real past-paper question.
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Actual vs potential growth?
Actual: rise in real GDP (AD-driven). Potential: increase in productive capacity — LRAS shifts right (supply-side).
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Real vs nominal GDP?
Nominal GDP at current prices; real GDP adjusted for inflation — real GDP shows volume of output change.
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Sources of LRAS growth?
More/better labour, capital investment, technological progress, improved institutions.
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Sustainable growth?
Growth that meets present needs without compromising future generations — environmental, social, and economic dimensions.
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Negative externality and GDP?
GDP may rise while welfare falls — pollution and resource depletion not fully deducted from national accounts.
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Inclusive growth?
Growth that spreads benefits across income groups and regions — reduces inequality, supports social stability.
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What is Real GDP?
Real GDP is the total value of all final goods and services produced by an economy in a given period, adjusted for inflation. It is calculated using the prices of a constant base year to measure the actual change in the volume of output.
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Define 'sustainable development'.
Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It seeks to balance economic, social, and environmental objectives.
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What causes the LRAS curve to shift to the right?
A rightward shift in the Long-Run Aggregate Supply (LRAS) curve is caused by an increase in the quantity or an improvement in the quality of factors of production. Examples include net investment, technological advances, and a more skilled labour force.
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What is the primary conflict between economic growth and sustainability?
The conflict arises because activities that boost GDP, such as industrial production and resource extraction, often generate negative externalities like pollution and deplete non-renewable resources, undermining the well-being of future generations.
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What is 'green growth'?
Green growth is a model of economic growth that aims to be environmentally sustainable. It focuses on using natural resources efficiently, minimising pollution and environmental impact, and investing in renewable technologies to decouple growth from resource depletion.