Economic growth is best defined as the:
A)increase in consumption level as a percentage of GDP over time.
B)percentage increase in real GDP over time.
C)percentage increase in nominal GDP over time.
D)percentage decrease in the overall price levels over time.

Question

Quizplus · Accepted Answer

Economic growth is typically measured by the percentage increase in real GDP (gross domestic product) over time. Real GDP is adjusted for inflation, so it reflects the changes in the quantity of goods and services produced, rather than changes in prices. Hence, option B is the best choice for the definition of economic growth. Choice A is incorrect because an increase in consumption level does not necessarily imply economic growth, as it could result from inflation or unsustainable borrowing. Choice C is incorrect because nominal GDP includes changes in both prices and quantity, making it less useful for measuring actual economic growth. Choice D is incorrect because a decrease in overall price levels could result from deflation, which can actually harm economic growth by reducing demand and potentially increasing unemployment.

Economic Growth Is Best Defined as The