ECON 1010 Chapter Notes - Chapter 22: Potential Output, Business Cycle, Production Function

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21 Feb 2016
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Economic growth is the sustained expansion of production possibilies measured as the increase in real gdp over a given period. The economic growth rate is the annual percentage change of real gdp: tells us how rapidly the economy is expanding. Real gdp increases because: the economy might be returning to full employment in an expansion phase of the business cycle, potential gdp might be increasing. The return to full employment in an expansion phase of the business cycle isn"t economic growth. The expanision of potential gdp is economic growth, A return to full employment in an expansion is a movement from inside the ppf to a point on the. Economic growth is the outward shift of the ppf from one line to a new line shifting outward. And the movement from point b to point c. Sustained growth of real gdp per person increases standard of living.

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