Understanding Economic Growth and Its Metrics

Economic growth refers to the increase in the production of goods and services in an economy and is typically measured using gross national product or gross domestic product. It leads to an increase in national income, productivity, and standard of living. Growth is represented as a function that takes into account physical capital, human capital, the labor force, and technology.

The economy goes through four phases known as the business cycle: Expansion, Peak, Contraction, and Trough, and real GDP, which accounts for inflation, is typically used to measure economic growth. To generate economic growth, four main areas need to be focused: increasing physical capital goods, improving technology, growing the labor force, and increasing human capital. Tax cuts can impact economic growth in the short term by raising demand, but government spending increases are generally more effective in stimulating economic growth.

Economic growth matters because it leads to the availability of more resources for more people, but it is important that the benefits are widespread. Tax cuts can impact economic growth in the short term by raising demand, but government spending increases are generally more effective in stimulating economic growth. Targeting tax cuts to lower- and middle-income households can help mitigate the effect of tax cuts on savings.

Source: https://www.investopedia.com/terms/e/economicgrowth.asp