4.2.3.1 Economic growth and the economic cycle NOTES

What primarily drives short-run growth?

• Improvements in human capital

• Technological progress

• Capital accumulation

• Changes in aggregate demand

Which factor is a key determinant of long-run economic growth?

• Consumer confidence

• Technological innovation

• Business cycles

• Supply shocks

What does a positive output gap indicate?

• An overheating economy

• Economic underutilization

• Downward pressure on prices

• Unemployment

Which of the following is a benefit of economic growth?

• Depletion of natural resources

• Higher living standards

• Income inequality

• Environmental degradation

What is a negative output gap a signal of?

• Technological advancement

• Upward pressure on prices

• Economic underutilization

• High demand

Which determinant affects short-run growth due to changes in resource prices or natural disasters?

• Global economic conditions

• Consumer spending

• Supply-side determinants

• Demand-side determinants

What is the impact of long-run growth on the economy?

• Exacerbation of inequality

• Strain on infrastructure

• Increased tax revenues

• All of the above

Which economic indicator is used to identify phases of the economic cycle?

• Real GDP

• Supply shocks

• Consumer confidence

• Global demand

What can cause changes in the phases of the economic cycle?

• Natural disasters

• Changes in international trade policies

• Technological innovations

• All of the above

What is a key focus of sustainable growth policies?

• Increasing consumer spending

• Maximizing economic output

• Reducing technological advancement

• Mitigating negative impacts on the environment