Actual growth
Definition. Actual growth is the increase in an economy real national output, measured by the rise in real GDP over a period, that results from fuller use of existing resources and the reduction of spare capacity. On a production possibility curve it is shown by a movement from a point inside the curve towards the boundary, not an outward shift of the curve.
It is driven mainly by a rise in aggregate demand when there is spare capacity. Sustained actual growth eventually needs potential growth, a rise in productive capacity, to avoid demand pull inflation near full employment.
This term belongs to The Production Possibility Curve in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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