Difference between Economic Growth and Economic Development

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Economics 515

AU11 Midterm 1 Review

1. Explain the difference between economic growth and economic development. Define extensive growth. Define intensive growth

A) Economic growth is defined by increases in GDP.

B) Whereas, economic development is more of a vague measure usually incorporating social measures such as literacy rates or life expectancy as a means of measuring a country's level of development.

C) Extensive Growth, is based on the expansion of the quantity of inputs in order to increase the quantity of outputs

D) Intensive Growth is based on the expansion of the quality of inputs

2. List 2 data sources researchers use to estimate historical standards of living and explain what they can infer from these sources. List three indicators of economic development other than National Income measures (NI, GDP, or GNP, level, growth rate, or per capita) that are of interest to economists and explain what can be inferred from each of these indicators.

A) Anthropometric history and GDP per Capita.

1) Human physical stature is a useful supplementary indicator of well-being. Height and weight are components and a relatively easily measured indicator of biological welfare.

2) Countries with higher GDP may be more likely to score highly on measures of welfare, including life expectancy.

B) CPI – Inflation,

3. Explain in detail 3 weaknesses of per capita GNP (or GDP) as a measure of economic well-being. Although this measure has the flaws you just listed (and others) it is the most oft-referenced statistic when considering standard of living differences across countries. Why?

A) The GDP is a measure of market activity; as such it excludes anything that does not have a price attached, as well as black-market activity. Unpaid housework, volunteer work, child care, barter and the illegal drug trade are only a few contributors to the economy that are not included in the GDP

B) If one were to use GDP alone as a normative indicator, then externalities, i.e., outside events over which we have no control – such as war, natural disasters and disease, and which lead to increased spending would be considered to be unambiguously positive inasmuch they increase economic activity.

C) GDP per capita, which divides the GDP by the country’s population, provides a rough estimate of each person’s “share” of the market economy. However, in reality, some people’s share of the economy is greater than others.

D) The major advantage of GDP is that it is simple and convenient to measure.

4. Describe the North and Thomas model explaining the Neolithic Revolution. Specifically, use a graph to illustrate how population growth affected this change? How is this model consistent with what we know about the transformation from Hunter-Gatherers to Settled Agriculturists?

5. Explain how the Neolithic revolution ultimately led to the formation of civilizations (list the steps in this evolutionary process).Provide 3 characteristics of civilizations (different from just settlement). What was the hierarchical social structure of the early civilizations? (Who was at the top, in the middle, and on the bottom layers these societies?)

6. List 4 contributions of the earliest civilizations (those that eventually formed the Babylonian Empire) and explain how each was important to continued economic growth.

7. What were the major contributions to economic development of the Phoenician Empire? Of the Greeks? Of the Romans?

8. What is meant by technological stagnation in the Greek and Roman Empires? How could “an Overdose of Slavery” be the cause? List 2 flaws of the slavery explanation. Provide an alternative explanation.

9. Explain the developments at the end of the Roman Empire that lead to the rise of the Manorial System. Specifically, from whom were the Romans under attack and what were the economic impacts? What measures did...
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