Economic growth

Question 1

Short run growth

Answer 1

growth of GDP by using idle resources (actual growth)

Question 2

Long run growth

Answer 2

increase in economies potential level of real output (potential growth)

Question 3

causes of short run growth

Answer 3

• increases in factors of AD formula
• lower interest rates
• lower income tax

Question 4

causes of long run growth

Answer 4

• increases in quality/quantity of FoP
• increase in productive efficiency
• increase in workforce size
• investment