What does gross domestic product measure?
The volume of goods and services produced during a given period.
How does nominal GDP differ from real GDP?
Nominal GDP is measured at current prices and can overstate growth when prices rise, while real GDP removes the price effect.
What is the formula for calculating the growth rate?
where final value is compared with initial value.
What does GDP not adequately account for by itself?
Resource depletion, the domestic economy, wealth distribution, and inequalities between countries.
What was the trend of GDP and living standards before the 19th century?
They remained broadly stagnant for millennia.
When did growth in GDP and living standards accelerate?
At the beginning of the nineteenth century.
What transformations accompanied the modern growth take-off?
Industrial, agricultural, and demographic transformations.
What change in mindset was linked to the modern growth take-off?
Changing mentalities.
How can economic growth affect material living conditions?
It can improve them.
Besides material conditions, what else can economic growth contribute to?
Social and demographic development.
What are factors of production?
Resources and means used to produce goods and services, especially labour and fixed capital.
Which factors influence the quantity of labour?
Population growth, net migration, annual working time, activity rates, employment behaviour, and working time distribution.
What does capital include?
Elements used for several years to produce goods or services, like machines, buildings, patents, and software.
What happens when capital is added without increasing other factors?
It produces diminishing marginal returns with smaller or zero extra gain per unit.
What does total factor productivity measure in production?
The efficiency of labour and capital use.
What did Robert Solow show about labour and capital in 1957?
They explain only part of economic growth.
What is technical progress in production?
Innovations improving productive efficiency with the same labour and capital.
What drives endogenous growth according to economic agents?
Decisions to produce knowledge and accumulate different forms of capital.
Which types of capital does endogenous growth rely on?
Physical, technological, human, and public capital.
What are institutions according to Douglas North?
Formal rules and informal conventions that structure behaviour, reduce uncertainty, and organise interactions.
What powers do property rights grant a person over a good?
To possess, use, sell, give away, and receive benefits from it.
How do inclusive institutions differ from extractive institutions?
Inclusive institutions allow broad participation; extractive institutions concentrate resources and power among a small elite.
How can technical progress affect workers' productivity and tasks?
It can complement workers by raising productivity or substitute them by automating tasks.
Which workers does technical progress tend to favour?
Skilled and non-routine workers.
What effect can technical progress have on the labour market?
It can polarise the labour market.
What does the unequal diffusion of technical progress contribute to globally?
Global polarisation between countries with high-value-added and low-value-added activities.
How can economic growth affect renewable resources?
It can deplete them if extracted faster than they regenerate.
What happens to non-renewable resources during economic growth?
They can be exhausted.
What is a negative externality?
An activity imposing costs on society not included in private costs.
What does strong sustainability require regarding natural capital?
Maintaining at least a constant stock of natural capital.
Which type of natural capital is especially important in strong sustainability?
Critical natural capital essential to ecosystem functioning.
What does green innovation improve while preserving natural resources?
Economic and human well-being.
Compared to thermal vehicles, how do electric vehicles differ in carbon dioxide emissions?
They can emit less carbon dioxide over their life cycle.
What is a recycling challenge associated with electric vehicles?
Their batteries are difficult to recycle.
What production challenges do electric vehicles face?
Their production requires energy and materials.
What do GDP per capita comparisons reveal between countries?
Differences in GDP, prices, living standards, and development.
What defines a productive combination?
The respective quantity of labour and capital required to produce a given output.
What do process innovations introduce in production?
New machines.
What do organisational innovations change in production?
The organisation of tasks.
What is the sequence of technical progress from research to production?
From fundamental research to applied research to commercialised innovation.
Where do growth and innovation mainly concentrate?
In metropolitan poles with dynamic firms, universities, and research centres.
What happens to other regions outside metropolitan poles?
They may remain on the margins.
How many planets would be needed if everyone consumed like the US?
Approximately five planets.
Which fuels especially cause air pollution?
Coal, oil, and gas combustion.
What health risks are associated with air pollution?
Respiratory, cardiovascular, and cancer risks.
What percentage of the world breathes air with high fine particle levels?
98% according to the World Health Organization.
How can public authorities support ecological innovation?
Through regulation, subsidies, and support for equipment like photovoltaic installations.
Answer 26 questions on Economic Growth and Its Challenges.
1. What does gross domestic product measure?
2. Why can nominal GDP give an exaggerated impression of economic growth when prices increase?
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