A country's real GDP can increase for brief periods of time

Question

Quizplus · Accepted Answer

Increases in real GDP can occur either due to an increase in aggregate demand (e.g. from government spending, tax cuts, etc.) or due to an increase in aggregate supply (e.g. from technological improvements, increased labor productivity, etc.). Therefore, either an increase in aggregate demand or an increase in aggregate supply can lead to a temporary increase in real GDP. It is not necessary for both aggregate demand and supply to increase simultaneously for real GDP to increase in the short run.

A Country's Real GDP Can Increase for Brief Periods of Time