Economic growth

Economic growth refers an increase in real GDP in the short run and expansion in productive capacity in the long run(expansion in potential output diagram). economic growth is one of macroeconomic objectives,they are emphasis on stable and sustainable economic growth whereas economic would growth countinue over time without endanger the future generation`s ability to expand productive capacity.
Economic growth can be achieved by matching trend growth whereas increasing AD meets increasing AS(Macroeconomic equilibrium diagram). By doing this can avoid positive output gap ( actual productivity exceed potential productivity=> inflation) and negative output gap ( actual productivity below potential productivity=>unemployment). However, it is hard to reach in practice.Most of time, economic growth by low and stable inflation.

The benefits of economic growth:

• Better living standards
• reduce in unemployment
• reduce poverty
• better status and power of a country in international organisation.

The costs of economic growth(when economic growth is not achieved by sustainable way):

• pollution in environment.
• stressful life.( works might require higher skill)
• low quality of life.( ability to purchases car, but congestion might occur)