Increase in real GDP. Growth is calculated with percent change formula.
There is short term and long term growth. They are essentially the changes of the short or long run curves. The long run is associated with the upward sloping curve in the Business Cycle, while the short run is associated with the expansionary phases.
If we use the Production Possibilities Curve as our measurement, short term is associated with points getting closer to the PPC, and long term is an expansion of the possibilities.
Causes
Short term
- Increase in AD
- Increase in SRAS
- Reduction in unemployment
Long term
- improvement in efficiency
- increased quantity
- technological change
Look at factors that influence the Aggregate Supply. Improvements in physical capital is much more sustainable as a method of growth compared to relying on natural capital.
Benefits of economic growth
These are pretty standard, just think of what people can do with money.
- Higher living standards
- Women
- Government spending on public or merit goods
- better for the environment
Achieving the goal of sustainable economic growth and low Inflation, LRAS must move while AD moves. Cost-pull inflations cannot lead to growth.