GDP

GDP

GDP

Economic growth means an increase in economic activity compared to an earlier point for example previous year. The most commonly used indicator is the percentage increase in the gross national product (GNP) or gross domestic product (GDP) per capita over a given period (month, quarter or year).

Economic growth is usually measured over a whole country. This is adjusted for inflation, so there is real growth. If not corrected for inflation, there is nominal growth. Also this does not necessarily mean that the purchasing power of the population is growing because the population may increase or decrease. Contrary to the economic growth is economic contraction usually referred to as a negative growth? It shows the activity of a decrease in growth as compared to previous year.

The volatility of economic growth is also referred as cyclical conditions with stronger growth (boom), alternating with periods of slower (recession) or even negative growth (crisis).

If economic growth is measured as the annual percentage change of GDP, it can be either positive or negative. Real GDP gives a better indicator of the situation as the Real GDP of the country may be misleading as the increase in prices could also lead to an increase in Nominal GDP. If only Nominal GDP increases, it does not mean that the economy is doing well and the standard of living has improved over time (Lucas, Robert, 1988, pp. 3-4). However, if the real GDP which is adjusted for inflation increases, it means that the country is now producing more goods and services than before and standard of living is improving. However, real GDP alone can also give wrong conclusions. If the population is increasing by higher percentage than the Real GDP of the country, it means the purchasing power of the country is not improving as Real GDP is adjusted for inflation. Hence, it is important to consider different economic indicators to assess whether the economy is now producing more goods and services and is better off or not. It is also important to understand and take into consideration the social indicators in order to make any conclusion. These indicators include Poverty, unemployment, human development etc. These indicators will give a better idea about Economic Development in a country.

E

Economic development can be defined as the ability of countries or regions to create wealth in order to promote and sustain prosperity and economic and social welfare of its inhabitants. It might be thought that economic development as the result of quantum leaps in a economic system rates facilitated by growth to have remained high over time and have helped maintain processes of capital accumulation. Obviously, the leaps are not given only if there are accumulations of a single quantitative variable, the jumps can be even external in nature and not just rely on the internal conditions of a country (Barro, Robert, 1991, pp. 407-443).

Economic growth is one of the goals of any society and it implies a significant increase in income and lifestyle of all individuals in ...