CHAPTER 1

GROWTH

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  • How to measure the size of the economy and how fast it's growing
  • How flows of money move around the economy
  • How people's incomes affect their decisions about spending or saving
  • How activity moves up and down but generally rises over time
  • Why a rise in spending can have a magnified effect on the economy
  • What recessions are and why they happen

WHAT IS ECONOMIC GROWTH?

We hear regularly on the TV and radio news, and in newspapers and online, about how quickly the economy is expanding or – as has been the case during the financial crisis – contracting. But what exactly is this thing we call ‘the economy’, and how do we measure its ...

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