Understanding Economic Growth: Sustainable vs Unsustainable Growth

The video tutorial explains real GDP and its role in economic growth, focusing on the differences between short-run and long-run macroeconomic equilibrium. It discusses unsustainable economic growth, which leads to inflation, and sustainable growth, which increases real output and employment without significant price level changes. The tutorial uses aggregate demand and supply curves to illustrate these concepts.

What does real GDP measure in an economy?

• The total employment rate in the economy.

• The change in price levels over time.

• The total value of goods and services produced, not adjusted for inflation.

• The total value of goods and services produced, adjusted for inflation.

In macroeconomic equilibrium, what must be true in the short run?

• Price levels must remain constant.

• Aggregate supply must exceed aggregate demand.

• Aggregate demand must equal short-run aggregate supply.

• Aggregate demand must exceed aggregate supply.

What happens when there is a shift in the aggregate demand curve?

• The price level remains unchanged.

• The economy moves to a new short-run equilibrium.

• The long-run aggregate supply curve shifts.

• The employment rate decreases.

What characterizes short-run unsustainable growth?

• It leads to long-term increases in output and employment.

• It results in inflation without long-term output benefits.

• It decreases the bargaining power of workers.

• It stabilizes the price level in the economy.

What is a potential consequence of short-run unsustainable growth?

• A decrease in production costs for firms.

• A positive output gap where actual GDP exceeds potential GDP.

• An increase in the long-run aggregate supply curve.

• A long-term decrease in the price level.

How does sustainable economic growth differ from unsustainable growth?

• It causes a leftward shift in the short-run aggregate supply curve.

• It results in higher output and employment without inflation.

• It leads to significant inflation.

• It decreases the quality of production factors.

What happens to the long-run aggregate supply curve during sustainable growth?

• It remains unchanged.

• It becomes horizontal.

• It shifts to the left.

• It shifts to the right.