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Economic Growth
What is economic Growth?

Economic growth is the percentage increase in real national output (real GDP) in a time period of
sustained increase of productive potential of an economy. Countries grow at different rates, this is
because they are at different stages in the economic cycle.

How do…

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3. Exchange Rates: Market exchange rates fluctuate a lot, also GDP includes all goods/services
in an economy regardless of their impact on living standards. Purchasing Power Parity must
be used to convert currencies. PPP involves comparing the same basket of goods/ services
in both countries.

Main advantages of Economic Growth:…

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A lack of AD e.g. maybe due to the lack of investment or lack of confidence in the economy
and/or higher interest rates defers borrowing.
Supply Side Shock e.g. there could be higher energy prices shifting AS left, so there are
higher prices and less output.

What are the reasons…


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