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Fast food: regulation and market failure

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Economic growth

Economic growth is arguably the most important target for economic policy, as it increases the opportunities for improving the wellbeing of members of society. Here Peter Smith highlights its key aspects

Figure 1 Economic growth

Potential economic growth is an expansion of the productive capacity of an economy. This can be depicted either as a shift in an economy’s production possibility frontier (PPF, as in Figure 1), or as a shift in the aggregate supply curve (Figure 2).

Economic growth is important because it leads to an increase in the resources available to help raise the standard of living of members of a society.

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Previous

Fast food: regulation and market failure

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Electric car subsidies: an example of government failure?

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