IB Economics HL (Chapter 19 full notes)

International Baccalaureate Economics Higher Level Notes

Chapter 19
Consequences of economic growth and the balance between markets and intervention

19.1 Consequences of economic growth

Economic growth and living standards

: if the total GDP of a country increases faster than its population, then an increase in GDP per capita results. This indicates that there is a greater potential for people to increase their consumption of goods and services, and improve their standards of living
: GDP per capita or income per capita is only an average measure, and does not tell us how the increase in income is distributed or whether there is a broadly distributed improvement in living standards. More appropriate measures of living standards are provided by the Human Development Index (HDI), as well as other indicators of development

: since growth provides additional resources allowing for improvements in standards of living. However, improvements in development indicators are highly variable, so that for a given rate of growth they are in some cases small and in others much larger