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Economic Growth

  • Date Submitted: 09/14/2011 02:51 AM
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Economic growth is an increase in activity in an economy. It is often measured as the rate of change of gross domestic product (GDP). Economic growth refers only to the quantity of goods and services produced; it says nothing about the way in which they are produced. Economic development, a related term, refers to change in the way goods and services are produced; positive economic development involves the introduction of more efficient or "productive" technologies or forms of social organisation.
Economic growth can either be positive or negative. Negative growth can also be referred to by saying that the economy is shrinking. Negative growth is associated with economic recession and economic depression.
Gross national product (GNP) is sometimes used as an alternative measure to gross domestic product. In order to compare multiple countries, the statistics may be quoted in a single currency, based on either prevailing exchange rates or purchasing power parity. Then, in order to compare countries of different population sizes, the per capita figure is quoted. To compensate for changes in the value of money (inflation or deflation) the GDP or GNP is usually given in "real" or inflation adjusted, terms rather than the actual money figure compiled in a given year, which is called the nominal or current figure.
GDP per capita is not the same thing as earnings per worker since GDP measures only monetary transactions for all final goods and services in country without regard to who receives that money.
1.2 Short-term stabilization and long-term growth
Economists draw a distinction between short-term economic stabilization and long-term economic growth. The topic of economic growth is primarily concerned with the long run.
The short-run variation of economic growth is termed the business cycle.
The long-run path of economic growth is one of the central questions of economics; in spite of the problems of measurement, an increase in GDP of a...


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