42.Economic Growth and Sustainability

Question 1

What is Actual Growth

Show using PPC and AD-AS

Answer 1

Increase in real GDP
- Greater utalisation of existing resources
- Short run

Check from notebook

Question 2

What is potential growth

Draw using PPC and AD AS

Answer 2

The productive capacity incraeses
- Long Run
- incrases in quality and quantity of resources like technology

check diagram using notebook

Question 3

What can lead to progress and development

Show using diagram

Answer 3

Actual + Potential growth
- GDP, Output, Income and Resources improve

Question 5

What is an output gap

Answer 5

the difference between actual and potential economic growth

actual-potential

Question 6

Negative output gap

Draw a diagram

Answer 6

• Lack of AD
• unemployed resources

Question 7

Positive output gap

Draw diagram

Answer 7

• Excess of AD
• machines working without maintance + people working overtime
• unsustaible in the LR

Question 8

Phases of Business cycle

Draw and Label them

Answer 8

1. Upturn
2. Peak
3. Downturn
4. Trough

Question 9

Causes of the Business Cycle

Answer 9

• Consumer confidence
• Money Supply
• Politicla cycle
• Supply-side shocks

Question 10

Automatic stabilisers

Answer 10

offset fluctuations in an economy
–> FIscal policies that are unplanned

Question 11

Sustainable Economic Growth

Answer 11

Economic growth that does not threaten future genration’s ability to experience economic growth