causes of economic growth

Question 1

what is economic growth

Answer 1

-an increase in Real GDP in an economy in a year caused by an increase in AD/LRAS

Question 2

short-run growth diagrams and what short run growth means

Answer 2

using up spare capacity to increase RGDP

-AD/AS:
shows economy using up spare capacity, right shift in AD

-PPF: inside the graph, moving up

Question 3

causes of short-run growth

Answer 3

-lower interest rates
-lower income/corporation tax
-higher consumer/business confidence
-higher government spending
-weaker exchange rate (SPICED reverse)

Question 4

long-run growth on diagrams and what it means

Answer 4

-increasing productive potential of the economy

-AD/AS: rightward shift of LRAS

-PPF: moving the curve up

Question 5

causes of long run growth

Answer 5

-increase in labour productivity
-investment
-infrastructure
-quantity of labour
-competition
-new resource discovery