Economic growth happens when there is a rise in production over a period compared to a previous one. It’s generally measured in terms of GDP and is an important indicator for countries. There are several types of economic growth including labor productivity, capital productivity and material productivity.
The most common measure of economic growth is gross domestic product (GDP). This measures the market value of all the goods and services produced in a country during a specific time period. GDP includes the output of both private and public sectors and is calculated as the sum of consumer spending, business investment and government spending, plus net exports.
There are many factors that contribute to economic growth, but the most straight-forward is population growth. With more people in the workforce, there are more economic goods that can be produced. Another way to boost economic growth is through improved technology. This can be in the form of newer, better tools, such as a fisherman using a net to catch more fish than a simple rod. Or it can be a new recipe that allows workers to produce more with the same amount of resources.
A growing economy is good for both businesses and individuals. When companies are doing well, they can hire more people and make more investments. This all helps create jobs and a higher standard of living for people around the world. But if economic growth is slowing or stalling, then people may spend less and lose jobs.
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