Word of the Day

Economic Growth

An increase in the economy's potential level of real output and an outward movement in the economy's production possibility frontier (PPF).

Short run economic growth is a movement from point X, inside the PPF, to Y on PPF1. Short run growth occurs when the economy recovers from a recession and employment increases.

Long run economic growth is shown by a movement from point Y to point Z. The definition mentioned above applies to LONG RUN economic growth.