Ch42 Economic Growth and Sustainability

Front

What is actual growth?

Back

Actual growth is when output increases in the short run, represented by a movement to a higher point within a production possibility curve.

Front

What is potential growth?

Back

Potential growth is in the long run and can be shown by an outward shift of the production possibility curve.

Front

What is a negative output gap?

Back

A negative output gap is when there is a lack of aggregate demand in the economy.

Front

What is a positive output gap?

Back

A positive output gap is when the economy is producing at above its maximum level of output.

Front

What is a business cycle?

Back

A business cycle occurs when there are fluctuations in real GDP, consisting of four phases: upturn, peak, downturn, and trough.

Front

What happens during the upturn phase of a business cycle?

Back

During the upturn phase, the economy is growing at a faster rate.

Front

What is the peak phase of a business cycle?

Back

The peak phase is the top point and a turning point for the rate of growth.

Front

What occurs during the downturn phase of a business cycle?

Back

During the downturn phase, the growth rate decreases and may even become negative.

Front

What is the trough phase of a business cycle?

Back

The trough phase is the lowest point in the cycle with a lack of aggregate demand.

Front

What is inclusive economic growth?

Back

Inclusive economic growth is where the benefits of growth are distributed fairly and opportunities are provided for all to progress.