And Economic Growth Flashcards
7 cards from real GDP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 And Economic Growth flashcards as text
What does it mean when an economy experiences 'jobless growth'?
Answer: GDP grows but unemployment does not fall significantly
Jobless growth occurs when GDP expands but employment does not rise proportionally, often due to productivity gains or structural changes.
Which of the following is an example of EXTENSIVE economic growth?
Answer: Adding more workers and physical capital to increase total output
Extensive growth means increasing output by adding more inputs (labor or capital), rather than using existing inputs more efficiently.
When real GDP growth is consistently below the growth rate of the labor force, what typically happens?
Answer: Unemployment tends to rise
If GDP growth is too slow to absorb new labor force entrants, unemployment rises as jobs aren't created fast enough.
What is Okun's Law?
Answer: The empirical relationship between the output gap and changes in the unemployment rate
Okun's Law is the empirical finding that for every 1% the unemployment rate falls below its natural rate, GDP is roughly 2% above potential.
Which factor helps explain why some low-income countries have NOT converged toward high-income country living standards?
Answer: Institutional barriers, poor governance, and lack of property rights
Poor institutions, weak governance, and insecure property rights discourage investment and innovation, preventing convergence.
How does trade openness generally affect economic growth?
Answer: It tends to boost growth through specialization, technology transfer, and larger markets
Open economies benefit from comparative advantage, access to foreign technology, and larger export markets, all of which support higher GDP growth.
Which combination of factors best explains the 'East Asian economic miracle' of rapid GDP growth in the late 20th century?
Answer: High savings rates, export-oriented policies, and heavy investment in education
The East Asian miracle was driven by exceptionally high savings and investment rates, export-led growth strategies, and strong human capital development.