What Is Economic Growth? And Why Is It so Important

Economic growth

An increase in the quantity and quality of the economic goods and services that a society produces.

• “Goods and services” become more affordable

• Less poor people: Ration between people’s income and the prices of what they can buy is increasing

Economic goods and services

Those that can be produced and that are scarce in relation to the demand for them.

• Useful: Is provided by people to each other as a solution to a problem they are faced with

• Delegability: Can be delegated to someone else

• Scarcity: Scarce in relation to the demand for them, takes human effort to produce them

• Producible: People can produce this product for each other

Economic production boundary

Define which goods and services are considered economic. Determining where to draw the line is complicated because there is different answer on whether some products should be considered.

GDP per capita (Gross Domestic Product per capita)

Broader measure of real income than household survey income, take into account expenditures and rental value of owner-occupied housing

• Calculated: Income of the entire economy/# of people in that country

• Measures: Poverty, prosperity, and growth

Median Income

The income level that divides the population of a given geographic region (usually country) into two equal groups

Consumption per day

Purchasing power per day indicating people’s material living conditions

• Poverty: Living on less than $30 per day