ECONOMICS
ECONOMIC GROWTH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Increase in per capita production
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Increase in per capita real income
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Structural change in the economy
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All of the above
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Detailed explanation-1: -Economic growth is an increase in the production of economic goods and services in one period of time compared with a previous period. It can be measured in nominal or real (adjusted to remove inflation) terms.
Detailed explanation-2: -It is measured in terms of improvement in the production of goods and services along with enhancement in quality of life within a country compared to previous years.
Detailed explanation-3: -Economic growth – measured as an increase of people’s real income – means that the ratio between people’s income and the prices of what they can buy is increasing: goods and services become more affordable, people become less poor.
Detailed explanation-4: -Economists define four factors of production: land, labor, capital and entrepreneurship. These can be considered the building blocks of an economy. How these factors are combined determines the success or failure of the outcome.
Detailed explanation-5: -Economic growth is an increase in the potential level of real output an economy can produce in a specified period of time (typically one year). Short-run economic growth is when the economy uses spare capacity in order to increase the real output. Long-run economic growth is an increase in long-run aggregate supply.