Economic growth
Definition. Economic growth is the increase in a country real GDP over time. Actual growth is the rise in current output from fuller use of existing capacity, shown by a movement from inside the production possibility curve towards it. Potential growth is the rise in maximum capacity, shown by an outward shift of the curve or a rightward shift of long run aggregate supply.
Actual growth comes mainly from higher aggregate demand using spare capacity, while potential growth comes from more or better factors of production. Sustainable growth needs both to advance together.
This term belongs to Economic Growth in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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