Economic Growth and Economic Cycle

Question 1

What is short run economic growth?

Answer 1

It’s an increase in real gdp

Question 2

What are the causes of short run economic growth?

Answer 2

• Changes in interest rates
• Fiscal policy
• Commodity prices
• Confidence of businesses and households

Question 3

What is long run economic growth?

Answer 3

It’s a sustained rise in a country productive potential

Question 4

What are the causes of economic growth in the long term?

Answer 4

• Investment
• Productivity
• Innovation
• Labour supply

Question 5

What are the advantages of export led growth?

Answer 5

• Increase in AD and reduced poverty
• Increased investment and employment

Question 6

What are the risks of export led growth?

Answer 6

• Over dependence on exports can means countries are vulnerable to fluctuations in the market
• Social and environmental costs, some countries may resort to exploiting natural resources
• Limited domestic demand, lead to a decline in domestic employment