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Economic Growth And Development Essay

1354 words - 5 pages

1)Distinguish between economic growth and economic development.Economic growth is a measure of a county’s productivity and the total combined income of that country. Economic development is a measure of how developed a country is i.e. people’s standard of living. For economic development to occur, economic growth also is needed but economic development is not needed for economic growth to occur.BasisEconomic DevelomentEconomic GrowthQualitative vs Quantitative ConceptQualitative conceptQuantitative Concept- where only total output is measuredInterdependenceWithout growth, develpment is not possiblePossible for economy to grow without fulfilling the criteria for developmentDistribution of National IncomeEven distribution is considered while measuring economic developmentThe pattern of distribution of income is not considered when measuring growthEnvironmental ConcernsConsidered when measuring developmentNot considered when measuring growthSustainabilityOne of the most important issues in measuring economic developmentMay not be considered when measuring growthStandard of LivingConsidered when measuring developmentNot considered when measuring growth.InfrastructureConsidered when measuring deveopmentNot considered when measuring growthMeasurementHDI (Human Development Index) and Quality of life index% change in national income2)Explain the following terms:a.Gross Domestic Product (GDP)Gross domestic product is the total value of goods and services produced by a country over a period of time. It is a country’s total income and is measured by adding up the expenditure on goods and services at the time of sale, or by adding up producers’ incomes from the sale of goods or services.b.GDP per capitaGDP (Gross Domestic Product) per capita is calculated by dividing a country’s GDP by the population. It is the average amount of income earned by one person in the specified country.c.Real GDPReal GDP is the level of GDP after changes in inflation have been taken into account. It measures the current year’s GDP with the base year’s GDP helping economists make useful comparisons of a nation’s output over a periods of time.d.Human Development Index (HDI)The Human Development Index (HDI) is the normalized measure of life expectancy, literacy, education, standard of living, and GDP per capita for countries worldwide. It is a standard means of measuring well-being, especially child welfare. It is used to determine and indicate whether a country is a developed, developing, or underdeveloped country.3)State the limitations of GDP per capita as a measure of standard of living.GDP per capita is not a reliable or accurate measure of a country’s standard of living because, GDP per capita is calculated by dividing a country’s GDP by the country’s population. It gives the average income of a country but does not give any indication of how this income is distributed. For example, in a country, a group of 1 million...

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