Understanding Economic Growth and Income Distribution

Defining Economic Growth in Real Terms

Why has economic growth been defined in real terms? How do you achieve it? Even if production is valued in more stable monetary units or during a recession, it does not necessarily mean that there is growth.

Sustainable Growth vs. Expansion

Why is the term "sustainable growth" emphasized in the definition of economic growth? It is used to differentiate between "growth" and "expansion." Expansion is a trend of increasing economic parameters that may not be maintained over time.

Two Definitions of Economic Growth

What differentiates the two definitions of economic growth? One definition works with real national income in global terms, and the second with real national income per capita.

Economic Growth, Political, and Social Development

What kind of relationship exists between economic growth and political and social development? While they are two different concepts (development being a broader concept), they are interdependent. Development is not possible without economic growth, and vice-versa.

19th-Century Economists' View on Growth

What was the nature of growth for economists of the 19th century? It was considered a long-term objective, involving an increase in the labor force and available capital within a context of fixed or low-variability technology.

The Very Long-Term Horizon

How do you define the horizon in the very long term? It is a period in which both production techniques and the nature of production factors and production itself are subject to change.

Impact of New Production Techniques on Long-Term Growth

How can the development of new production techniques and communication affect long-term economic growth? It can lead to material changes or alterations in specific technology production equipment (automation, computerization, automation of processes, etc.) or intangible changes, such as changes in the organization of production (improvements in management and administration techniques).

Government Intervention in Income Distribution

What are the two main forms of government intervention in the distribution of income in a mixed economy system?

• In the formation of income standards.
• Subsequent to the formation of income, through redistribution measures.

Regulations Affecting Income Formation

What are the regulations that affect the formation process of incomes in mixed economic systems? These are rules that regulate wages generally, and in some cases, interests or benefits. One such standard is the one that sets the minimum wage.

Purpose of Redistributing Income Through Taxes

The purpose of redistributing income through taxes is to force those with higher incomes to contribute more and those with lower incomes to contribute less.

Indirect Redistributive Measures in a Mixed Economy

Examples of indirect means, such as redistributive measures in a mixed economy system, include housing prices that are lower than the free market, regulation of prices of staple goods, etc.

How the Market Determines Production

How does the market settle the question of how to produce goods and services? Based on the prices of different factors, the employer, considering technological constraints for substitution between them, will use the combination of factors that has the lowest cost.

Derived Demand for Factors of Production

Why do we say that the demand for factors is a derived demand? Because it depends on the quantity of products that consumers demand. If product demand is high, employers will demand more factors to carry out higher production. When the demand for products decreases, the demand for factors also decreases.