Economics theme 2.5.1

Question 1

what is the difference between short run and long run

Answer 1

Short-Run
The annual percentage change in Real National Output
Or
Gross Domestic Product (GDP)

Long-Run
The maximum potential output of the economy using all factor resources as illustrated on the Production Possibility Frontier.

Question 2

What is the economic cycle

Answer 2

This refers to the stage of economic growth that the economy is in.
o The economy goes through periods of booms and busts

Question 3

what is the order of economic cycle

Answer 3

boom (peak)
recession (decline)
Slump (lowest)
recoverey (as it makes its way back to boom)