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Explanation of Economic Growth [Virtual Economy]

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An explanation of economic growth.

Economic Growth - Explanation

Economic growth is growth in the level of national income. There are various measures of national income, but the one used in the Virtual Economy model is gross domestic product Look up Gross Domestic Product in glossary . We measure growth as the percentage change in GDP. However, it is very important that we only take the percentage change in real GDP Look up Real GDP in glossary . This means the change in GDP after inflation has been taken into account.

Economic growth tends to follow a cyclical pattern. There may be boom periods when economic growth is faster, but these may well be followed later by periods when the economy slows right down. This pattern is known as the trade cycle Look up Trade Cycle in glossary or business cycle.

Why not also have a look at the relevant theories about economic growth, or have a go at a worksheet about it?