Study Notes
Economic growth refers to the increase in a country's real GDP over time, indicating a rise in real output. It is measured using real GDP to account for inflation and can be calculated by the percentage increase in real GDP from one period to another. Economic growth can be shown in both short-term and long-term using models like AD-AS and PPC, and it impacts living standards, the environment, and income distribution.
Exam Tips
Key Definitions to Remember
- Economic Growth — Increase in real GDP over time.
- Real GDP — GDP adjusted for inflation.
- Recession — Consecutive negative growth rates in real GDP.
Common Confusions
- Confusing nominal GDP with real GDP.
- Misunderstanding the difference between short-term and long-term growth.
Typical Exam Questions
- What is economic growth? Increase in real GDP over time.
- How do you calculate the economic growth rate? (Real GDP in Y1 - Real GDP in Y) / Real GDP in Y * 100
- What are the impacts of economic growth? Effects on living standards, environment, and income distribution.
What Examiners Usually Test
- Understanding of economic growth definitions and calculations.
- Ability to explain models showing economic growth.
- Evaluation of economic growth impacts on society.