2.1.1 Economic growth

define economic growth & how it is measured

economic growth refer to the increase in a country’s real GDP over time and is typically measured as a percentage increase from one period to another. It reflects improvements in the economy's capacity to produce goods and services.

what does economic growth signify

Economic growth signifies an expansion of an economy’s production capacity and is a key indicator of its overall economic health

how is economic growth measured

typically measured as a percentage increase from one period to another. It reflects improvements in the economy's capacity to produce goods and services.

growth rate formula

·      Growth rate = [(GDP at time 2 - GDP at time 1)/GDP at time 1] x100

Real GDP

Real GDP is the value of GDP adjusted for inflation. It provides a more accurate reflection of an economy's size and how it's growing over time, allowing for comparisons across different periods.

Nominal GDP

Nominal GDP is the value of GDP without adjusting for inflation, reflecting current market prices. It can overstate or understate economic growth compared to Real GDP.

Total GDP

Total GDP is the combined monetary value of all goods and services produced within a country’s boarders during a specific time period, measured in a given currency.

GDP per capita

GDP per capita the measure of a country's economic output that accounts for its number of people. It is calculated by dividing the total GDP by the population, providing a per-person average that helps compare economic performance across nations.

Value GDP

Value GDP represents the total market value of all final goods and services produced in a country without adjusting for inflation, similar to Nominal GDP.

how is value GDP calculated

it is the nominal figure, and it can be calculated by volume x current price level

Volume GDP

GDP adjusted for inflation to reflect the true value of goods and services produced over time, providing a more accurate measure of economic growth.

Gross National Income (GNI)

GNI is the total income earned by a country’s residents and businesses, including any income earned abroad, minus income earned by foreign residents and businesses within the country

Cross country comparisons

Comparing growth rates between countries help asses relative economic performance and identify trends in economic development

Long-term trends

Examining growth rates over time reveals economic patterns and trends. Long term analysis can identify periods of economic expansion, recession, or stagnation