What are typical GDP patterns for a high-income economy like the United States in the long run and the short run?

In the long run, we can see an overall trend of sustainable economic growth, where GDP increases over time due to factors such as technological advancements, population growth, and increased capital stock. The United States has experienced a steady growth in GDP over the past century, usually around 3% annually. This can be attributed to continuous improvement in productivity levels, advancements in infrastructure, human capital, and overall economic development.

One of the key drivers of long-run GDP growth in the United States has been technological progress. Innovation in various fields, such as information technology, healthcare, and energy, has led to increased productivity and efficiency. This continuous technological advancement has contributed to the overall increase in GDP, as it allows for greater output within the same resource base.

In the short run, the GDP for a high-income economy like the United States experiences fluctuations due to economic changes, such as demand shocks, supply shocks, and policy changes. These fluctuations are commonly referred to as the business cycle, which consists of phases like expansion, peak, contraction, and trough. During periods of expansion, GDP is increasing, while during periods of contraction, GDP is decreasing.

During the expansion phase, factors such as increased consumer spending, higher investment in capital goods, and growth in government spending contribute to an increase in GDP. During the contraction phase, decreased consumer spending, lower investment in capital goods, and reduced government spending contribute to a decrease in GDP.

The short-term fluctuations in GDP are affected by government policies and central bank actions. These include fiscal policies (government spending and taxation decisions) and monetary policies (interest rate decisions and other central bank actions). These policies are implemented to stabilize the economy; for example, during a recession, expansionary monetary policies can be used to reduce interest rates and boost economic activity, leading to an increase in GDP. To summarize, the United States' high-income economy experiences a sustainable long-run growth in GDP, driven mainly by technological progress, population growth, and increased capital stock. In the short run, however, GDP fluctuates due to business cycles (expansion and contraction phases) and the effects of government policies and central bank actions.