Economic Growth

Economic Growth

Increase in the real output of goods and services produced in a country over time.

Aggregate Production Function Model

It essentially shows how much an economy can produce given its available resources and technology. 

Growth on a PPF Curve

Outward movement of PPF (Able to meet more needs and wants, increases oppurtunity cost.)

Rates for Economic Growth

3% - Desirable

more than 4% - Pressure on inflation and on scarce resources

Under 2 % - G & S not needed to be produced as much, resources distribution inefficient, rising unemployment.

Real Gross Domestic Product

The total volume of all final g &s produced in the domestic economy over a period of time.

GDP Rate of Growth

% change in real GDP for the year.

(GDP2 - GDP1) / GDP1

Productivity

The amount of output produced per hour of work. Main driver of potential economic growth, improves efficiency of all factors.

Causes to rising productivity

Rising stock of capital equipment per worker

Improving labour skill (education and training)

More infrastructure - Transport and communication, social overhead capital

And one more