2.5.1

Question 1

What is short-run economic growth?

Answer 1

Increase in real GDP

Question 2

What are factors that can cause economic growth in short-run?

Answer 2

-Changes in interest rates set by central bank
-Fiscal policy
-Commodity prices such as oil
-Currency changes affect export/import demand
-Trading conditions in other countries
-Confidence of businesses and households

Question 3

What is long-run economic growth?

Answer 3

Sustained rise in a country’s productive potential

Question 4

What are the main drivers of long run economic growth?

Answer 4

Higher productivity and gains from innovation and rising real incomes for households

Question 5

What are factors that can cause economic growth in the long run?

Answer 5

-Investment
-Productivity
-Labour supply
-Research and development
-Innovation
-Enterprise

Question 6

What is export led growth?

Answer 6

Where a significant part of the expansion or real GDP, jobs and per capita incomes flows from successful exporting of goods/services from one country to another

Question 7

What are advantages of export-led growth?

Answer 7

-Injection into circular flow of income, rise in AD
-Provide revenue/profit for businesses, feed thru increase in capital investment spending