1. Lesson objectives
By the end of the lesson students should be able to:
1 define and calculate economic growth
2 explain economic development
3 explain the causes of economic growth
4 discuss the advantages and disadvantages of economic growth
5 explain the growth cycles
6 discuss policies to alleviate poverty

2. Economic growth can be defined and measured in
two ways:
 As an increase in real GDP (real national output)
over time.
 As an increase in real GDP per capita. Growth in
real per capita incomes is perceived to be a better
measure of economic performance.

3.  Economic growth is measured in terms of
percentage changes in real GDP/ GDP per capita.
Assume that in 1988, real GDP for a country was
$450bn and in 1989, this figure rose to $500bn.
Then the growth rate as measured by the
percentage increase in real output is given as:
 This implies that the economy produced 11.1%
more of physical goods and services than in the
previous year.

4.  The Quality and Quantity of Natural Resources
 Quantity and Quality of Human Resources
 Increase in Physical Capital
 Technological Progress
 Allocation of Resources

5.  Higher consumption
 Economic development
 Employment creation
 Higher standard of living
 Poverty reduction
 More tax revenue for government
 Military and political influence

6.  Depletion of natural resources
 Negative externalities
 Technological unemployment
 Urbanisation
 Long term effects of inflation and deficit balance
of payment

7.  the quality and access to education and training
 Promotion of research and development
 A deliberate policy to stimulate savings
 Stimulation of private investment
 Promotion of free trade and competition
 industrialization policy

8.  Growth in real output that is achieved
without depleting natural resources or
harming the natural environment

9.  BUSINESS OR ECONOMIC OR GROWTH CYCLE
is the recurrent pattern of fairly predictable
fluctuations in the growth rate of real GDP over
time
 Growth(expansion)
 Economic boom(peak)
 Economic recession(downturn)
 Economic recovery (upturn)

10.  A sustained increase in the total output or
real GDP of an economy
 Economic activity is expanding rapidly. Many
firms enjoy increased sales and profits. New
firms are formed. Output, income and
employment are all increasing.

11.  A period following economic recovery in an
economic cycle, characterized by an
economy working at full or near-full capacity
with a low level of unemployment and
aggregate demand, sales and profits at or
near their peak, and often accompanied by
rising inflation

12.  A general slowdown in the rate of economic
growth in an economy following an economic
boom. Officially, it is usually associated with
prolonged period of negative growth in real
GDP
 Economic slump/depression is a prolonged
recession during which economic activity
shrinks and unemployment remains very
high. There may be deflation as a result.

13.  A period following an economic recession in
an economic cycle during which aggregate
demand, output, employment and incomes
begin to rise

14.  Explain what is meant by economic growth
 Discuss how trade and investment can help
economic growth
 Discuss whether economic growth is always
advantageous
 Discuss whether economic growth should be
the main aim of government economic policy