ECONOMICS
ECONOMIC GROWTH
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Inflation
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Economic growth
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Economic planning
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Living standard
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Detailed explanation-1: -Economic growth occurs when there is a rise in the production of goods and services for a certain period as compared with a previous one. It is generally measured in terms of GDP and is an indicator of the economic health of a country.
Detailed explanation-2: -Productivity growth occurs when we find ways to produce more with a given amount of labour and capital. Productivity growth is often associated with increases in efficiency and advances in technology. Increases in aggregate supply increase the productive capacity of the economy (usually called potential output).
Detailed explanation-3: -Economic growth is an increase in a country’s per capita output.
Detailed explanation-4: -Capital goods are important for increasing the long-term productive capacity of the economy. More capital goods reduce consumption in the short-term, but can lead to higher living standards in the economy. Therefore, economies often face a trade-off between consumer goods and capital goods.
Detailed explanation-5: -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.