SHORT-TERM AND LONG-TERM GROWTH AND THEIR CAUSES 1 SHORT-TERM AND LONG-TERM GROWTH AND THEIR CAUSES Student’s Name Economics Professor’s Name Institution December 10, 2014.
SHORT-TERM AND LONG-TERM GROWTH AND THEIR CAUSES 2 Short-Term and Long-Term Growth and Their Causes Economic growth is the general increase in a country’s production and consumption of resources. The resources referred to in this context are divided into either goods or services. Economists insist that economic growth literally refers to an economy that is experiencing an expansion of productive potential, rather than one that seems to be getting better. A country’s economic growth is usually indicated by an increase in annual gross domestic product (GDP) (Cortes 2006). The purpose of this paper is to explain short-term and long-term economic growth and their effect on a country’s economic development. Short-Term Growth According to Sloman, short-term growth is measured by an annual percentage change in a country’s real national output. Real national output is mainly driven and calculated according to the reported level of annual aggregate demand. However, real national output is subject to change in accordance with any shifts in the short-run aggregate supply curve (SRAS). In addition, real national output may be further explained by the use of actual growth, potential growth and potential output-sometimes referred to as potential GDP (Sloman 2006). Actual growth is indicated by a percentage annual increase in a country’s real GDP. For example, statistics acquired from surveys on growth rate mainly refer to actual growth. On the other hand, potential growth is a representation of the speed at which a country’s economy is
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- Spring '13
- Mawili Muhammad
- Economics, Basic Of Economics, The Influence Of Economic, long-term economic growth, Sloman, long-term growth