Economic Growth Flashcards
1
Q
Cause of SREG
A
In the short run, primary cause of economic growth is AD, this leads to actual economic growth
2
Q
Another cause of SREG
A
an increase in SRAS
3
Q
Causes of LREG
A
- Export-Led growth
- An expansion of supply factor inputs (e.g. a rise in labour supply)
- improvements in production tech
- increased productivity
(For LREG to occur, there needs to be an increase in the productive capacity of the economy. This leads to potential economic growth.
4
Q
What are the three diagram used for LREG
A
- Classical LRAS curve
- PPF curve
- economic trade cycle diagram
5
Q
Significant factors causing EG
A
- Investment (in capital goods)
- Innovation (of products and processes)
- Immigration (increased productive capacity)
- Changes in birth rates (increased birth rates will lead to a right LRAS shift)
- Increases in productivity
- Export-led growth (greater investment in capital)
6
Q
What is actual economic growth
A
In the short run, the primary cause of EG is an increase in AD, this is actual EG
7
Q
What is potential economic growth
A
An increase in productive capacity of the economy, an increase in LRAS, that is potential EG.