Economic growth

G3 Economics - syllabus K343, 2027

How growth is measured with real GDP, what causes it, its costs and benefits, recessions, and policies to promote growth.

• Economic growth and how it is measured

  Economic growth is an increase in real GDP: the value of output after removing the effect of price rises.

• What causes economic growth

  Growth comes from more total demand when there are idle resources, or from more and better resources.

• Advantages and disadvantages of economic growth

  Growth raises incomes, jobs and tax revenue, but can harm the environment and widen inequality.

• Recession: causes and consequences

  A recession is a period of falling real GDP, caused by lower demand or fewer or worse resources.

• Policies to promote economic growth

  Fiscal and monetary policy boost demand in the short run; supply-side policy raises capacity in the long run.

• Put it together: Promote growth

  A government wants faster economic growth over the next ten years. Compare three approaches.