Macro Theme 2 2.5

Question 1

What is economic growth (2)

Answer 1

Increase in GDP
Expansion of the productive potential of the economy

Question 2

What is short term economic growth calculated by

Answer 2

The percentage change in real national output

Question 3

What is long term economic growth

Answer 3

Is a trend- seen as potential growth

Question 4

What are 4 diagrams that show economic growth

Answer 4

Trade cycle
PPF
Neoclassical LRAS shift right
Keynesian LRAS AD shift right

Question 5

What are the factors that cause economic growth (4)

Answer 5

1. Increase in AD (domestic or trade)
2. Labour force
3. Improved technology
4. Increased investment

Question 6

What is potential growth

Answer 6

The long run expansion of the PPF of an economy and this can be caused by an increase in AS. It is the potential output of an economy that they should provide if all resources are fully utilised

Question 7

What is actual growth

Answer 7

Percentage increase in real GDP and can be caused by increases in AD