Tuesday, 27 October 2009

Economic growth: Short run vs Long run

Economic growth - Is a growth of real output in an economy over time, usually measured by real GDP.

LONG RUN ECONOMIC GROWTH

Graphical representation of the long run economic growth:

http://welkerswikinomics.com/blog/wp-content/uploads/2008/04/lr-economic-growth_1.jpeg
http://www.econguru.com/introduction_to_economics/image/economic_growth.gif

Causes of Long Run Economic Growth:
  • improvement in productivity and efficiency
  • increase in resources
  • changes in technology
SHORT RUN ECONOMIC GROWTH

Graphical representation of the short run economic growth:

http://www.marketoracle.co.uk/images/2009/Apr/outlook-20-2.gif


Causes of Short Run Economic Growth:
  • Raise in Aggregate Demand due to increase of one of it's components, ceteri paribus.

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