Economic growth

Tilcayo Cats original · British Bees · Sources and editorial assessment · Originals retention rule

Economic growth is an increase in the amount of goods and services an economy produces. "The simplest definition of economic growth is an increase in real GDP (i.e., GDP adjusted for inflation)." GDP, or gross domestic product, is a measure of a country's output. Real GDP removes the effect of changing prices. When prices rise, nominal GDP, which is not adjusted, grows faster than real GDP.

"Economic growth (traditionally defined as increasing GDP) is a statistic that is closely followed by policy makers and the media."

Causes

"Economic growth increases the maximum productive capacity of the economy." Better technology has raised the amount each worker can produce. Money can be invested in machines, tools, factories and other equipment, which can raise productivity further. Trade has also helped: successful growth has often come from making use of chances to trade.

"If there were just one simple story about how economic growth occurs, economic analysis would be much easier."

History

Modern economic growth is linked to the Industrial Revolution. This was a time of rapid social, technological and economic change, which began in Britain and Western Europe.

"This economic growth has been very unevenly distributed among countries, as well as among people within countries."

See also

• Productivity
• Fiscal policy
• Monetary policy
• International trade