Economic Growth
Economic Growth is defined as the way that the real income of an economy increases over time. This generally signifies that the economy is wealthier and producing more, individuals are better off, and that living standards are higher. A more technical definition would go into the way that Economic Growth is measured, which is usually in terms of the Gross Domestic Product. The Gross Domestic Product is the sum total of the value of a country?s output over the course of a year. However GDP figures can be misleading – for example, a growing economy may have rising output levels but also may have a growing birth rate which negates any positive effect on the standards of living. Alternatively, figures that show clear growth in terms of wealth may be ignoring the fact that inflation rates are rising also, thereby negating the power of said growth.
Normally, Real Income as used when looking at Economic Growth takes the GDP figures and then takes out the effect of inflation rates by forming an index thereby creating a reasonable set of statistics from which to draw conclusions.
Economic Growth is clearly seen as a desirable objective for all economies. It
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