A2 macro-problems alevel 经济.pptVIP

Macroeconomic Problems By april Economic Growth PPC Actual Growth VS. Potential Growth Ways to improve Potential Growth Obstacles to increase Quantity, Quality Technology Difficult to improve quality of labor due to lack of schools, teachers and textbooks High opportunity cost of increasing capital at the expense of current consumption in the country Moreover, debt problem if capital is acquired from abroad on loans Expensive to undertake RD with benefits in the medium to long term Benefits of Economic Growth Rising material living standard thanks to more goods and services More state benefits given to the poor through extra tax revenue Increasing business’ and consumers’ confidence leading to further growth Increasing a country’s international prestige and power Costs of Economic Growth Opportunity cost of economic growth in the short run, if the economy is at its full employment Working hours, pressure and anxiety may be increased Depletion of natural resources and damage to the environment Sustainable Development Economic Growth VS. Economic Development Indicators of Comparative Development Characteristics of Developed Developing Economies Population growth and population structure Income distribution Unemployment External trade Urbanization Technology MNCs and FDI External debt Population growth population structure The concept of Optimum Population 2. Income distribution 3. Unemployment Income is less evenly distributed in developing countries developing countries tend to suffer from higher unemployment due to surplus population and shortages in land, capital and enterprise 4. External trade Developing economies: reliance upon the export of primary products severe price fluctuation due to inelastic PED PES failure in benefiting from global economy growth as demand is income inelastic tendency of trade of primary goods to decline with increase in manufactured goods E.g. china 5. Urbanization 6. Technology Developing economies: Very rapid