AQA AS Economics help Watch
Hi, I'm just revising for Unit 2, and am struggling to understand the difference between short-run and long-run economic growth, and how these can be applied to essay questions?
Long-run economic growth refers to the rate at which the economy could grow as a result of changes in the country's productive capacity. It's basically the shift of the PPC curve outwards.
Therefore, short-run economic growth is an increase in rGDP (ie by increases in AD -if there's spare capacity and AD increases, then so will rGDP), while long-run economic growth is an increase in the quality and quantity of resources (ie increases in the AD matched by increases in the AS).
Not sure about the type of your essays, as I'm not familiar with AQA.
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to what extent might an increase in the size of public expenditure as a proportion of gdp be likely to increase the rate of economic growth?