ECONOMICS (CBSE/UGC NET)

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: -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-3: -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.

Detailed explanation-4: -Economic growth is best defined as an increase in: either real GDP or real GDP per capita. Real GDP per capita is found by: dividing real GDP by population.

Detailed explanation-5: -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.