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Factors influencing economic growth

Updated: 4/28/2022
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That'll be any factors that influence the components of the Aggregate Demand (Consumption + Investment + Government spending + Net exports). Any factors that influence each and every component of AD will affect economic growth (through the multiplier process).

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Economic growth is measured by an increase in the real Gross National Product of a country or its GDP. There are two types of economic growth, long run and short run economic growth. Short run economic growth is caused by an increase in the aggregate demand of an economy, otherwise referred to as AD. AD is made up of four factors, consumption, investment, government spending and the net worth of imports and exports. An increase in any of these factors can lead to an increase in real GDP. Long run economic growth is caused by an increase in the quality or quantity of the factors of production of the economy. These FOP's are land, labour, capital and enterprise. An increase in any of these factors will cause an increase in the potential output of an economy meaning it has the potential to produce more.

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