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The Long-Run Trend in Real GDP Is Upward

question 114

Essay

The long-run trend in real GDP is upward. How is this possible given business cycles? What explains the upward trend?


Definitions:

Domestic Price

The price of goods or services within a country, which may differ from international prices due to tariffs, subsidies, or other domestic policies.

World Price

The global market price of a product or service, determined by worldwide demand and supply.

Infant Industries

New or emerging industries in the early stages of development, often considered needing protection from international competition to grow.

Protectionism

Economic policy of restricting imports from other countries through methods such as tariffs and import quotas, to protect domestic industries.

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