An important term indicating a rate of economic growth, which will continue in the long run and is unlikely to fall back to a lower level in a short period of time.
Below are a set of diagrams to show the impact that sustainable economic growth has on an economy. In this instance, the sustainable part of the term refers to the fact that the growth and higher output should be able to be maintained because of the increase in the productive capacity, like at point D. As a result no inflation is created.
If this LRAS curve shift was not achieved then the economy would be in a boom position. This boom period is temporary because the economy cannot continue to produce output equal to Y2, as they have insufficient resources to do so. Eventually, pressures on the factors of production (e.g. labour) forces the cost of production up (e.g. wages) and these higher costs gets passed onto the consumers via higher prices. The price level in the economy adjusts to P3 to take pressure off the economy.
In a data response question it is important to be able to decipher whether the introduction of an economic policy creates unsustainable or sustainable growth. This will help you evaluate the impact of the policy on the important macroeconomic variables.