ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Growth is defined as the increase in output per capita of a country over a long period of time. One primary factor that influences the growth of an economy is technological change. When looking at long-run growth, technological change in the economic environment makes production more or less efficient.

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.