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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Business Cycle and Economics

Fundamentals of Economics

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In this learning path, you'll explore the fundamental dynamics of supply and demand, examining how firms operate across different market structures. You'll study macroeconomic principles including output measurement, price levels, and growth factors, while understanding business cycle fluctuations and policy responses. The path covers monetary and fiscal policy impacts, concluding with international trade dynamics and capital flows.

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