How is economic growth typically measured?

Economic growth is typically measured by the growth rate of real Gross Domestic Product (GDP). Real GDP represents the value of all goods and services produced in a country, adjusted for inflation. This makes it a more accurate measure of economic performance over time, as it reflects the actual increase in output without the distortions caused by rising price levels. By focusing on the growth rate of real GDP, economists can assess whether an economy is expanding or contracting and how these changes impact living standards and overall economic health.

Other measures, such as population growth, employment rates, and inflation rates, provide important insights into the economy but do not directly quantify economic growth in the same way that real GDP does. Population growth can influence economic potential but does not directly reflect production output or efficiency. Similarly, while employment rates are important for understanding labor market conditions, they do not necessarily correlate directly with the value of goods and services produced. Inflation rates indicate price stability but do not measure economic growth itself, as they often represent the reverse consequence of growth rather than its cause.