2.1 Economic growth Flashcards
1
Q
Define long-run economic growth
A
the expansion of the productive capacity of the economy (increase in AS)
2
Q
Define short-run economic growth
A
an increase in actual GDP (change in RNOP)
3
Q
What is the policy objective of economic growth
A
Expanding the resources available in an economy to increase standards of living
4
Q
Difference between Real and Nominal
A
Real is adjusted for inflation Nominal isn’t
5
Q
Causes of short-run economic growth
A
increase in AD or SRAS
6
Q
Causes of long-run economic growth
A
Increase in quality or quantity of FOPs
7
Q
Examples of ways AD can change
A
Lower IR, Lower income/corporation tax, Higher business/consumer confidence, higher govt spending, weaker x rate
