Economic growth

Economic growth is one of the areas we study in relation to government macroeconomic objectives.  It is important to be able to distinguish between both actual and potential economic growth; not only through definitions but also with diagrams.  It it possible to show the difference first using a PPC  diagram, with a movement of the point we are at showing actual growth and a shift of the curve itself demonstrating potential growth.  We can also show growth using AD/AS diagrams.  You should try to remember and practice this too.  Below is a reminder of what we have discussed regarding economic growth.