South Korea's economic trajectory has long been defined by its rapid adoption of cutting-edge technology. Under the comprehensive 'Digital New Deal', the government has committed trillions of won to establish nationwide 5G networks, artificial intelligence systems, and primary digital infrastructure across public and private sectors. By subsidising and directly funding these large-scale digital networks, the state has actively supported the economic recovery post-crisis.
Beyond immediate economic relief, these initiatives aim to transition South Korea into a fully data-driven economy by 2030. The integration of AI into manufacturing and public services has attracted high-value investments and dramatically improved logistics efficiency. Economists note that the massive public capital investment in digital infrastructure has been a cornerstone of both short-run and long-run economic growth. However, critics point out the rising national debt levels and the potential digital divide that could leave older, traditional sectors behind.
Extract G states: 'the massive public capital investment in digital infrastructure has been a cornerstone of both short-run and long-run economic growth.'
With the help of an AD/AS diagram, explain how a massive increase in public capital investment in digital infrastructure may cause short-run and long-run economic growth.
222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.