ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Economic growth is the increase in the value of an economy’s goods and services over time. Real gross domestic product is the best way to measure economic growth, because it removes the effects of inflation.

Detailed explanation-2: -An increase in real GDP is not necessarily economic growth Economic growth means that an economy has increased its ability to produce more. When an economy is producing beyond potential output, it might have experienced an increase in real GDP, but that is not economic growth.

Detailed explanation-3: -Definition: Real Economic Growth Rate is the rate at which a nation’s Gross Domestic product (GDP) changes/grows from one year to another. GDP is the market value of all the goods and services produced in a country in a particular time period.

Detailed explanation-4: -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-5: -Broadly speaking, there are two main sources of economic growth: growth in the size of the workforce and growth in the productivity (output per hour worked) of that workforce. Either can increase the overall size of the economy but only strong productivity growth can increase per capita GDP and income.