15 Economic Growth (MACRO)

Question 1

What is the “Economic Growth” definition?

Answer 1

Economic growth means an increase in real GDP – which means an increase in the value of national output/national expenditure.

Question 2

What are the Causes of economic growth?

Answer 2

rising demand and an increase in productive capacity.
Rising demand = AD (CIG(XM))
productive capacity = supply side (LRAS)

Question 3

Name 3 examples of something that would shift AD.

Answer 3

• Higher real wages (rise in consumption)
• Tax Cuts (rise in consumption)
• Devaluation (Rise in exports, decrease in imports)