A growing economy means that more people can live better lives. It also gives the world a chance to tackle the challenges of global inequality and climate change. So it’s important to know what economic growth actually is — and how we measure it.
To measure economic growth, researchers use data from countries all around the globe. They adjust the figures for price differences and take inflation into account. These measurements make the data comparable across countries and time periods. They’re used in statistics such as gross domestic product (GDP).
There are a few different ways to generate economic growth. One is to increase the amount of physical capital goods in an economy. This increases productivity if the new capital is used in the right way. For example, a fisherman with a net that can catch more per period will be more productive than a fisherman using an older net.
Another way to generate growth is to boost the labor force. However, this is not without risk. In order to grow an economy, the additional workers must be productive enough to offset their consumption of economic goods and services. In addition, they need to save some of their income and invest it in the economy.
A third way to boost economic growth is by developing improved production technology. This can lead to more output with the same amount of labour. For example, Johannes Gutenberg’s invention of the printing press allowed books to be produced much faster than before.
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