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

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2
Q

Another cause of SREG

A

an increase in SRAS

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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.
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4
Q

What are the three diagram used for LREG

A
  1. Classical LRAS curve
  2. PPF curve
  3. economic trade cycle diagram
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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)
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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

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7
Q

What is potential economic growth

A

An increase in productive capacity of the economy, an increase in LRAS, that is potential EG.

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