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Short term and long term growth

In the short term A move in aggregate demand (consumption) this is short term because the productive potential capacity of the economy has not increased in size. It can also be shown through an increase in the short run aggregate supply curve.
In the long term there is an increase in the productive potential of the economy, so aggregate supply goes out. Shown with an increase in the long run aggregate supply curve.
1. This causes a shift in the PPF curve outwards (the ppf curve shows the maximum production potential of the economy)
2. An increase in the long run aggregate supply curve is illustrated through a shift outwards in the PPF curve.

Short term and long term growth

	Created by Harry Moore over 10 years ago