Economic growth is the overall increase in the value of goods and services produced by a country. This can be measured by changes in nominal or real GDP (gross domestic product) – real GDP includes the change in prices of all goods and services, while nominal GDP only includes the changes in quantity – but both measures are usually reported on each quarter. Economic growth is a good thing, because it generally means that people are earning and spending more, and are feeling better off. When it slows down, however, it can cause businesses to cut back on investment and hire fewer employees – which can hurt people’s incomes and make them feel worse off.
The main source of economic growth is increased capital – money that is invested in business, machinery, buildings, etc. This can be generated in many ways, including by saving or borrowing money from abroad. Another way is through improved technology, which allows workers to produce more output from the same stock of resources by combining them in novel ways. For example, the invention of the automobile revolutionized transportation by allowing people to travel longer distances with greater speed and efficiency.
A third way is by increasing the number of laborers, which increases production. This can lead to problems such as overproduction and inflation, but if it is offset by lower unemployment rates, it can be an effective strategy for increasing wealth. In addition, growth can also reduce poverty rates by providing more consumers with stable and adequate incomes.
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