What is the difference between short-run and long-run economic growth?

Short-run growth is simply an increase in a country's 'gross domestic product' or 'GDP', whereas long-run growth is an increase in the country's productive capacity. When thinking in terms of an AD-AS diagram, short run growth may be shown by an outward shift in aggregate demand which leads to an increase a long the "GDP" axis. Long run growth may be shown by an outward shift in AS, as this shows an increase in the country's productive capacity.

Answered by Chet H. Economics tutor

11548 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Explain, using examples, what is meant by the circular flow of income.


Assess how important government policies, other than taxation, are to a business when deciding where to locate its operations. (12)


Explain the likely effects on the circular flow of income of the change in unemployment between 2013 and 2015.


Explain why the growth in the demand for freight transport has been roughly the same as that of GDP.


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo
Cookie Preferences