9708 · 9.2
Economic growth and sustainability
**Growth and sustainability** (9.2) combines **macro diagrams** with **evaluation**. Use **LRAS shifts** for supply-side growth stories and distinguish **actual from potential** growth.
Need to know
What you need to know
- Economic growth is the increase in an economy's productive capacity.
- Nominal GDP is output valued at current market prices (Price x Quantity).
- Real GDP is output valued at constant base-year prices, removing the effect of inflation.
- The formula for Real GDP is (Nominal GDP / GDP Deflator) x 100.
- Positive real GDP growth indicates an increase in the volume of goods and services produced.
Explanation
Economic growth and sustainability
- Economic growth is the increase in an economy's productive capacity.
- Nominal GDP is output valued at current market prices (Price x Quantity).
- Real GDP is output valued at constant base-year prices, removing the effect of inflation.
- The formula for Real GDP is (Nominal GDP / GDP Deflator) x 100.