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Economic growth is an increase in real GDP over time, shown by a rightward shift of the LRAS curve. Growth comes from increases in resources (labor, capital, natural resources), technological advancement, and improvements in institutions that promote productivity.
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Practice Questions: Test Your Understanding
Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.
Question 1 of 3
How does the crowding out effect potentially impact long-run economic growth?
It increases long-run growth by stimulating aggregate demand.
It decreases long-run growth by reducing private capital formation.
It has no impact on long-run growth, only short-run fluctuations.
It increases long-run growth by lowering inflation.
It decreases long-run growth by increasing the money supply.
Key Takeaways
- 📊Master the fundamentals: Understanding these core concepts is essential for success in AP Economics.
- ✅Practice makes perfect: Use the interactive exercises and practice questions to reinforce your understanding.