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Economic Growth
an increase in the aggregate output of an economy (measured using real GDP)
higher real GDP = more goods/services over time
more output = better living standards
2 Ways Economic Growth Occurs
acquiring more resources (land, capital, labor, technology
becoming more productive in use of existing resources
Growth Rate
the percentage change in Real GDP (or Real GDP per capita) from one year to the next
growth rate = (real GDP - real GDP of previous year / real GDP of previous year) x 100
Annual Rate of Growth
average growth rate of Real GDP over several years
annual rate of growth = sum of growth rates / # of years
Rule of 70
determines how long it takes a country’s real GDP per capita to double
# of years to double = 70 / growth rate