GEE Lecture 2 - Tutorial Q (ANSWER GUIDE)

Indicative content
Definition of economic growth (increases in GDP)
Difference between GDP and GNP - Gross Domestic Product (GDP) shows the value
of the output produced within a country in a given time period. Gross National
Product (GNP) is the market value of all products and produced in one year by labour
and property supplied by the residents of a country. While GNP measures the output
generated by a countrys enterprises (whether located domestically or abroad), GDP
measures the total output produced within a countrys borders (whether produced by
that countrys own local firms or by foreign firms).
Calculation of GDP = C+I+G+X-M Discussion of each component of GDP and how
they affect economic growth
Pro economic growth
o People prefer more goods and services rather than fewer. Provided economic
growth outstrips population growth, it will lead to higher income per head and
higher consumption.
o Using the UK as an example, the poorest families of today are better off than
those of the 19th century as a result of economic growth
o Absolute poverty has been largely eliminated in the UK partly due to the
welfare provisions which have been funded by the proceeds of economic
growth
o Health and living standards continue to improve
o Life expectancy continues to increase as a result of better healthcare facilities
Problems as a result of economic growth
o Social costs of economic growth e.g. congestion, pollution - these may
diminish the quality of life
o Consumption of irreplaceable resources - and dangers associated with
substitutes e.g. nuclear power
o Change in lifestyles and attitudes - complacent, carefree and selfish attitudes
towards life, reliance on the safety net of state benefits and welfare provision.
o Growth may not be fairly distributed - wealth concentrated in the hands of a
small percentage of the population
Mark allocation:
Max 5 marks: Student describes key issues and theories relating to economic growth and its
associated pros and cons.
Max 10 marks: Student applies and/or explains key issues and theories relating to economic growth
and its associated pros and cons.
Max 15marks: Student analyses the key issues and theories relating to economic growth and its
associated pros and cons.
Max 25 marks: Student evaluates the key issues and theories relating to economic growth and its
associated pros and cons.