4.6 - Economic growth
4.6.1 Definition of economic growth
Definition
Economic growth is defined as any increase in output in a country in ONE YEAR
Sustainable economic growth
● Sustainable EG occurs when a country achieves EG that does not endanger
the country’s ability to grow in the future
● This is the most optimal type of EG
Actual vs. potential EG
● Actual EG is an increase in the output of a country, while potential EG is an
increase in a country’s productive
capacity
● Actual EG
1) Shift to right of either AD/AS
2) Increase in actual output in the
PPC
● Potential EG
1) Shift to right of PPC
4.6.2 Measurement of economic growth
EG rate
1) EG rate is the increase in % in economic growth over time
2) A fall in the EG rate does not mean a fall in real GDP
3) This is when the output is increasing at a decreasing rate
4) It is a signal that the economy is going to slow down OR as a result of govt
intervention to control inflation
How to measure EG
1) Real GDP is used to measure EG
2) EG is the increase in the percentage of real GDP per annum
GDP
● Gross domestic product is the total amount of goods and services produced
in a country in one year
4.6.1 Definition of economic growth
Definition
Economic growth is defined as any increase in output in a country in ONE YEAR
Sustainable economic growth
● Sustainable EG occurs when a country achieves EG that does not endanger
the country’s ability to grow in the future
● This is the most optimal type of EG
Actual vs. potential EG
● Actual EG is an increase in the output of a country, while potential EG is an
increase in a country’s productive
capacity
● Actual EG
1) Shift to right of either AD/AS
2) Increase in actual output in the
PPC
● Potential EG
1) Shift to right of PPC
4.6.2 Measurement of economic growth
EG rate
1) EG rate is the increase in % in economic growth over time
2) A fall in the EG rate does not mean a fall in real GDP
3) This is when the output is increasing at a decreasing rate
4) It is a signal that the economy is going to slow down OR as a result of govt
intervention to control inflation
How to measure EG
1) Real GDP is used to measure EG
2) EG is the increase in the percentage of real GDP per annum
GDP
● Gross domestic product is the total amount of goods and services produced
in a country in one year
