Transcript 30 ECONOMIC GROWTH File

ECONOMIC
GROWTH
What is it?

The increase in national income over time.

The most common measure of economic
growth is GDP, or Gross Domestic Product.

This is the market value of all “officially”
recognized final goods and services
produced within a country in a given period
of time.
What does this measure?
 GDP
is the combined total of all incomes
from profits, wages, royalties, interest and
income generated abroad.
What does this not measure?
 This
may not measure inflation or the
overall increase in prices in an economy.
 This
can be fixed by using real GDP.
 That
is GDP adjusted for inflation.
What does this not measure?
 This
does not measure population growth.
 If
an economy grows by 3 percent and
the GDP rises by 3 percent, is there
actually real growth in GDP?
 This
can be adjusted by computing GDP
Per Capita.
What does this not measure?
 The
value of home produced goods.
 Some goods and services are traded and
therefore not recorded.
What does this not measure?
 The
standard of living in a country.
 Just
because there is a rise in GDP does
not mean that everyone's standard of
living has improved.
 GDP
does not measure air quality, holiday
time, income distribution and overall
public safety in an economy.
Statistical Errors
 Mistakes
happen.
 Gathering data on a massive scale to
compute GDP is a big task.
 Given enough data, data processing and
calculation, errors do occur.
The hidden economy
 There
are plenty of markets that are not
looked at in computing GDP.
A
lot of these are black markets.
 This
is when goods and services are
provided illegally.
 Some
are harmful while others are not.
Examples of illegal markets
 Drugs
 Estimated
annual market size of
400,000,000,000 USD a year.
Illegal Markets
 Arms
or weapons.
 Not all weapons trading is illegal.
 The market for illegal arms is huge.
 What are some reasons why?
Illegal markets
 Plants
and animals.
 It is illegal to capture and sell thousands of
different types of animals.
 After drugs and guns, this is the third
largest illegal market.
Today’s Menu
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Abalone: $52 per kilogram
Arowana Fish: $20,000
Baby Elephant in Thailand: $7,000
Baby Tiger in Iran: $3,200
Bear Bile: $200,000 per pound
Bear Paws: $50 for set of 4
Black Cockatoo: $31,000 in Australia
Butterfly (Queen Alexandra): $8,195
Clouded Leopard: $5,700 in China
Dog Meat: $29 in Vietnam
Elephant: $28,200
Elephant Tusk: $1,800 in Vietnam
Full Dead Bear: $4,500 in Taiwan
Geckos from New Zealand: $1,300 in Europe
Gorillas: $40,000
Iguanas: $10,600
Today’s Menu
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Ivory: $1,800 per kilo
Komodo Dragon: $30,000
Money in Europe: $123
Monkey in Thailand: $55
Orangutan: $45,000
Owl: $250 in India
Pangolin: $5 in Indonesia, $15 in Malaysia, $100 in China
Ploughshare Tortoise: $4,000
Polar Bear Skin: $7,760 to $9,930
Puppies trafficked from Ireland: $255 to $1,275 in the UK.
Rhino Horn Dagger: $14,000
Rhino Horns: $97,000 per kilogram
Rhino Horns (Crushed for medicine powder): $10 in Vietnam
Shark Fins: $400 per pound
Snake Venom: $215,175 per liter
Today’s Menu
Snakes (Banded kraits): $2,190 in India
Snow Leopard Pelt: $1,000 in Afghanistan
Spotted Salamander: $103 on the Internet
Tiger (Dead): $5,000
Tiger (Live): $50,000
Tiger Bone Wine: $88
Tiger Penis: $1,300
Tiger Remains: $70,000 in China
Tiger Skin: $35,000
Tortoises: $10,000 in Madagascar
Turtle: $20,000 in China
THE ECONOMIC CYCLE
 The
 An
growth of GDP is not always positive.
economy can experience times when
there is little or no economic growth.
Graph
Boom
 This
is the peak of the economic cycle.
 This
is when GDP is growing quickly.
 Firms
will be expanding and hiring.
 Confidence
economy.
levels are high in the
Downturn
 The
economy is still growing but at a
slower rate.
 Demand
to fall.
 Firms
for goods and services will start
may be more reluctant to expand or
hire new employees.
Depression or Slump
 This
is the bottom of the economic cycle
where GDP starts to fall with significant
increases in unemployment.
 10%
Decline in real GDP.
 Lasting
two or more years.
Recession
A
less severe form of a depression is a
stupid definition. Write the one on the
baoard.
 This
is defined by no or negative
economic growth for two or more
quarters, not exceeding two years.
Recovery
 When
GDP starts to rise again.
 Businesses
and consumers regain their
confidence in the economy.
 Firms
begin expanding and people start
spending.
The benefits of economic
growth
 Increased

incomes
Increase in GDP usually means that
average people in that country have more
income.
Benefits of economic
growth
 More
leisure time.
 Greater
life expectancy.
Benefits of economic
growth
 Better
public services.

The more an economy grows, the more tax
revenue that government can make.

This means that the government has more
money to spend on public services.
Problems with economic
growth
 Regional

Not every region benefits the same from
economic growth.
 Societal

differences.
differences.
The rich get richer. The poor probably do
not.
Problems with economic
growth
 Environmental

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Damage.
Economic development can come at a
cost to the environment.
Depends on the type of growth.
Problems with economic
growth
 Unsustainable
Growth.

Economic growth generally
uses up non renewable resources.

It is impossible to sustain high levels of
growth using the same resources
Inflation
 This
is the overall rise in prices throughout
the economy.