ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Actual economic growth is measured by the annual percentage change in a country’s real national output (GDP). Potential economic growth is also known as trend growth and is measured by the estimated annual change in a country’s potential level of national output.

Detailed explanation-2: -Economic growth comprises of both actual and potential growth. Actual growth can be defined as the increase in real national income of the economy; potential growth can be defined as the increase in productive capacity of the economy.

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: -Economists use many different methods to measure how fast the economy is growing. The most common way to measure the economy is real gross domestic product, or real GDP. GDP is the total value of everything-goods and services-produced in our economy.