The various demand-side and supply-side determinants of short-run growth of real national income and the long-run trend rate of economic growth
Several factors drive how fast an economy grows. Demand-side factors affect spending in the short run. Supply-side factors raise the economy's productive capacity over the long run.
Formula
AD = C + I + G + (X − M)
Real World
The UK government's post-pandemic infrastructure programme — including HS2 and broadband rollout — aimed to shift LRAS rightward by raising the economy's capital stock, while also boosting AD through government spending (G) in the short run.
Exam Focus
Separate demand-side and supply-side factors clearly; examiners deduct marks when students conflate AD shifts with LRAS shifts.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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