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.
  

The reasons for individuals, organizations and society having to make choices

Important definitions: economics, economic problem, household, microeconomics, macroeconomics, FoP's(factors of production), goods, services, land, labour, capital, entrepreneurship, entrepreneur, factor endowment, production, want, scarcity, choice, opportunity cost, specialization, exchange, subsidy, division of labour, productivity, PPC-PPF(production possibility curve/ frontier), developed economy, developing economy, trade-off, economic growth productive potential,economic system, market economy, price system, supply, demand, command economy and mixed economy

Factors of production and their reward:

• land - rent
  
• labour - wage
  
• capital - interest
  
• entrepreneurship - profit

Example of developed economies: USA, UK, Germany, Italy, France, Japan
Examples of developing economies: China, Egypt, Malaysia, Czech Republic

Production Possibility Frontier / Curve: