Sustainable economy

Sustainable growth

Economic growth occurs increases over time. Real output is measured by Gross Domestic Product (GDP) at constant price so that the effect of price rises on the value of national output is rem

sustainableconomic growth means a rate of growth which can be maintained without creating other significant economic problems, especially for future generations. There is clearly a trade-off between rapid economic growth today, and growth in the future. Rapid growth today may exhaust resources and create environmental problems for future generations, including the depletion of oil and fish stocks, and global warming.

Periods of growth are often triggered by increases in AD, such as a rise in consumer spending, but sustained growth must involve an increase outputIf output does not increase, any extra demand will push up the prices level

Growth based on debt

In terms of sustainability, it may be argued that growth based on short-term public debt, rather than long term productivity, is unsustainable – hence worries about the build-up of sovereign d

PPFs and economic growth

For an economy to continue to grow in the future, it needs to increase its capacity to grow.  An increase in an economy’s productive potential can be shown by an outward shift in the economy’s PPF.