Economic growth – definition
Economic growth is a macro-economic concept which refers to a rise in real national income, which is sustained over two consecutive quarters of a year.
Stable growth is a key macro-economic policy objective as it leads to higher standards of living and increased employment. However, there are certain costs of growth, including increases in consumption and production externalities, inflationary pressure, and international trade difficulties.
Economic growth can be expressed in absolute terms, such as increasing from $400bn to $410bn, or in percentage terms, such as growing by 2.25%. Tracking changes in percentage term is, clearly, more useful for comparative purposes. Over time an economy’s ‘trend rate of growth’ can be estimated which indicates the average rate of growth when seasonal and cyclical factors are eliminated.
Gross Domestic Product – GDP – is perhaps the most commonly used way of measuring growth. Typically for most countries, GDP can be estimated in three ways:
- The output approach
- The expenditure approach
- The income approach
The laissez-faire economic theory centers on the restriction of government intervention in the economy. According to laissez-faire economics, the economy is at its strongest when the government protects individuals' rights but otherwise doesn't intervene. The ...
What Is Adverse Selection? Adverse selection is a term that describes the presence of unequal information between buyers and sellers, distorting the market and creating conditions that can lead to an economic collapse. It develops ...
Explaining The K-Shaped Economic Recovery from Covid-19 A K-shaped recovery exists post-recession where various segments of the economy recover at their own rates or levels, as opposed to a uniform recovery where each industry takes the same ...
Does Public Choice Theory Affect Economic Output? Both on paper and in real life, there is a solid relationship between economics, public choice, and politics. The economy is one of the major political arenas after all. ...
Largest Retail Bankruptcies Caused By 2020 Pandemic As we know at this point, the COVID-19 pandemic has thrown major companies in the US and the world over into complete havoc. Many have filed for bankruptcy, with an ...
Identifying Speculative Bubbles and Its Effect on Markets Speculation plays an interesting role in economics and one that drastically affects markets. If you ever see "speculation" in this context, be sure to pay attention. It is ...