Economic growth

• Economic growth

  An increase in national output measured in real GDP
• Short-run (actual) growth

  Using exsisting resourses more efficiently
• Actual growth is caused by a shift in agreggate supply and demand

  • Changes in agreggate demand lead to an increase in consumption which acts as an incentive for firms to produce more, increasing real GDP
  • Increase in agreggate supply boosts productivity in the economy
• Long-run (potential) growth

  An expansion of the full capacity in an economy over a period of time