physicsamor
Badges: 20
Rep:
?
#1
Report Thread starter 4 years ago
#1
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.
0
reply
keynes24
Badges: 10
Rep:
?
#2
Report 4 years ago
#2
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
0
reply
CallMeGodfather
Badges: 1
Rep:
?
#3
Report 4 years ago
#3
(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.
0
reply
physicsamor
Badges: 20
Rep:
?
#4
Report Thread starter 4 years ago
#4
(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?
0
reply
physicsamor
Badges: 20
Rep:
?
#5
Report Thread starter 4 years ago
#5
(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
0
reply
CallMeGodfather
Badges: 1
Rep:
?
#6
Report 4 years ago
#6
(Original post by physicsamor)
I've read through that, it helps me a lot, thank you
Any time
0
reply
X

Quick Reply

Attached files
Write a reply...
Reply
new posts
Back
to top
Latest
My Feed

See more of what you like on
The Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Personalise

Do you have the space and resources you need to succeed in home learning?

Yes I have everything I need (255)
57.17%
I don't have everything I need (191)
42.83%

Watched Threads

View All
Latest
My Feed

See more of what you like on
The Student Room

You can personalise what you see on TSR. Tell us a little about yourself to get started.

Personalise