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Economic Growth and Inflation

We can explain economic growth and inflation using the Aggregate Demand and Long Run Aggregate Supply curves.

Economic growth is the persistent growth in potential GDP, while inflation is the persistent increase in general prices as shown in the graph below:

As you can see both AD and LRAS have shifted to the right. Increase in LRAS brings economic growth. This happens due to increased labour, more capital, or better technology. However, there is a bigger increase in Aggregate Demand (AD), which causes inflation.

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Macroeconomic Equilibrium

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01
Gross Domestic Product
02
Methods of Calculating GDP
03
Nominal Vs. Real GDP
04
GDP, National Income, and Personal Income
05
Relationship Between Saving, Investment, Fiscal Balance, and Trade Balance
06
The IS Curve
07
The LM Curve
08
Aggregate Demand Curve
09
Aggregate Supply Curve
10
Shifts in Aggregate Demand Curve
11
Shifts in Supply Curve
12
Macroeconomic Equilibrium
13
Economic Growth and Inflation
14
Business Cycle and Economics
15
Impact of Changes in Aggregate Supply and Demand
16
Sources, Measurement, and Sustainability of Economic Growth
17
The Production Function

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Financial Analysis

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Aggregate Output, Prices and Economic Growth

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