Cause of Growth Flashcards
Actual growth
A rise in real GDP in a given time period. It is also known as short run growth and is depicted by the aggregate demand curve shifting to the right.
Long run growth
The trend growth rate – mainly determined by changes in the stock of available factor inputs and also improvements in productivity. Trend growth is represented by a rightward shift in the LRAS (or PPF boundary).
Net inward migration
When the number of migrants coming into a country is higher than those leaving in a given time period – usually a year.
Output measure GDP
Value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, the service sector and government.
Potential growth
This is a rise in the productive potential or the capacity of the economy. It is not yet actual growth until AD rises to use up that extra capacity.
Production
Value of output of goods and services e.g. measured by GDP or an index of production in specific industry.
Productive potential
Productive capacity of the economy – boosted by high quality capital investment.
Productivity
How much output is produced for a given input (such as an hour of work).
Seasonal adjustment
Estimates in which the element of variability due to seasonal influences, which may distort the data, has been removed. Affects data such as unemployment, retail sales and output from highly seasonal industries.
Shocks
Unexpected events that can affect both aggregate demand and supply e.g. unexpected changes in world oil prices, currency volatility and the effects of political instability.
Short-run economic growth
Short run growth is cyclical; the growth of real GDP is determined by aggregate demand (C+I+G+X-M) and also factors affecting short run aggregate supply (SRAS).
Sustainable growth
Growth that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainable growth can continue without damage to the environment, or the exhaustion of nonrenewable resources.
Trend growth
The long run average growth rate – mainly determined by changes in the stock of available factor inputs and also improvements in productivity. Trend growth is represented by a rightward shift in the LRAS (or PPF boundary).
Exogenous growth
An unexpected event beyond the control of the country’s officials that has a large negative impact on its economy.
