4.4 Economic Growth Flashcards
What is the definition of Economic Growth?
An increase in the output of goods and services in an economy over time, measured by the rise in real GDP
How is economic growth measured?
Measured as the percentage increase in real GDP over a specific period.
What’s the difference between nominal GDP and Real GDP?
Nominal doesn’t take inflation into account whilst real does
What is the economic cycle?
An graph that’s shows how an economy will experience slumps, recovery’s, booms and recessions but the overall trends of an expanding economy over the long run
What does Boom mean?
A rapid increase in economic growth
What does recession mean?
Two consecutive quarters of negative economic growth
What is the demand side causes of economic growth?
Increase in AD, a rise in any factor that effects AD, C+I+G+(X-M)
What causes an increase in economic growth?
A increase in the AD or LRAS curves
Why is real GDP preferred over nominal GDP for measuring economic growth?
Provides a more accurate representation of an economy’s output by removing the effects of price level changes
