Macro - Causes Of Economic Growth

Question 1

Factors that can cause economic growth

Answer 1

Caused by an increase in AD. therefore any change in the components of AD will result a change in Economic Growth.
Could be shown on a PPF Curve.

Question 2

Actual growth

Answer 2

Actual economic growth is measured by the annual percentage change in a country’s real national output (GDP).

Question 3

Potential growth

Answer 3

Potential economic growth is also known as trend growth and is measured by the estimated annual change in a country’s potential level of national output.

Question 4

The difference between actual and potential growth

Answer 4

Actual economic growth is measured by the annual change in a countries real GDP compared to Potential which is predicted growth or trend growth

Question 5

Explain the importance of international trade for (export-led) economic growth

Answer 5

International trade plays a crucial role in export-led economic growth. It allows countries to take advantage of their comparative advantages, produce and export goods and services efficiently and import what they lack. This leads to increased competitiveness, access to larger markets, and creation of jobs.