Macro: Economic Performance

Question 1

What is economic growth

Answer 1

Economic growth is a rise in the real value of goods and services being produced in a given period of time

Question 2

Draw a short run economic growth graph

Answer 2

Seneca 12.1.1

Question 3

How can short run economic growth be measured

Answer 3

Short run economic growth can be measured by the annual percentage change in real GDP

Question 4

How can short run economic growth be shown on an AS/AD diagram

Answer 4

It can be shown on an AD/AS diagram by a rightwards shift of Aggregate Demand

Question 5

What will cause short run economic growth to rise

Answer 5

Anything that causes Aggregate Demand to rise will cause short-run economic growth

Question 6

What are the the different components

Answer 6

The components are Consumption, Investment, Government Spending, Exports and Imports

Question 7

What component can rise without causing short-run economic growth

Answer 7

Apart from imports, if any of these components of aggregate demand rise, so will short-run economic growth

Question 8

What can Long-run economic growth be caused by

Answer 8

Long-run economic growth can be caused by factors that serve to increase the Long Run Aggregate Supply

Question 9

What factors increase aggregate supply

Answer 9

• An increase in the quantity of factors of production
• An increase in capital for higher investment from firms
• An increase in the quality of the factors of production