Growth theory focuses on long run time horizons, whereas business cycles investigate short run time spans.
What is short run and long run in business cycle?
- Each nation’s economy varies between periods of extension and contraction.
- These changes are caused by levels of business, efficiency, and the whole request for and supply of the nation’s products and administrations.
- In the short-run, these changes lead to periods of development and retreat.
- But within the long-run, financial development can happen, permitting a country to extend its potential level of yield over time.
- Business cycles regularly care around short-term vacillations within the economy, that's five a long time or less.
- While growth hypothesis is more long-term arranged, they center on the long term enhancement of the economy.
- The time skyline for that's more than five a long time.
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