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    Is economic growth always desirable?
    I dont need help writing it, but im not sure about my diagrams, as in how to explain them. E.g increase in economic growth could lead to inflation, is this a simple AD/SRAS diagram and how do you explain it, in the long run im not too sure though. Hints welcome.
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    You could show demand pull inflation with an AD/AS diagram. You could explain it by indicating how economic growth has taken place and why inflation is bad for the economy. A rise in potential economic growth (rise in LRAS) is pushing price level down
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    (Original post by physicsamor)
    Is economic growth always desirable?
    I dont need help writing it, but im not sure about my diagrams, as in how to explain them. E.g increase in economic growth could lead to inflation, is this a simple AD/SRAS diagram and how do you explain it, in the long run im not too sure though. Hints welcome.
    Pretty much what Keynes said. If economic growth is occurring over a long period of time, this will inevitably increase inflation and demand. Increased inflation would result in higher interest rates, ultimately decreasing demand and increasing unemployment. To represent this diagrammatically, you could draw a simple demand and supply curve showing the shortages caused by excess demand during periods of economic growth.
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    (Original post by keynes24)
    You could show demand pull inflation with an AD/AS diagram. You could explain it by indicating how economic growth has taken place and why inflation is bad for the economy. A rise in potential economic growth (rise in LRAS) is pushing price level down
    Thank you It makes more sense in my mind now.

    In the short run, is there any evaluation points, it depends etc?
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    (Original post by CallMeGodfather)
    Pretty much what Keynes said. If economic growth is occurring over a long period of time, this will inevitably increase inflation and demand. Increased inflation would result in higher interest rates, ultimately decreasing demand and increasing unemployment. To represent this diagrammatically, you could draw a simple demand and supply curve showing the shortages caused by excess demand during periods of economic growth.
    I've read through that, it helps me a lot, thank you
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    (Original post by physicsamor)
    I've read through that, it helps me a lot, thank you
    Any time
 
 
 
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