Define Economic Growth

question 13

Short Answer

Define economic growth. Why is it described as a process rather than an event?

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Definitions:

Inflation Rate

The rate at which the overall price level of goods and services increases, thereby reducing the buying power.

Nominal Wage Rates

The amount of money paid to an employee by an employer in current prices, without adjusting for inflation.

Real Wages

Wages or salaries adjusted for inflation, reflecting the true purchasing power of income.

Potential Output

The economy’s maximum sustainable output, given the supply of resources, technology, and rules of the game; the output level when there are no surprises about the price level.