Question

Answer the following questions

What are indicators of economic growth?

Answer 1

Economic growth implies a consistent and a considerable rise in the amount of goods and services produced by an economy over a period of time. The following are the three main indicators of economic growth.

a. Increase in Gross Domestic Product- GDP of a country implies the total value of all the goods and services produced in a country over a time period. According to some economists, the GDP is one of the most important indicators of the economic growth of a country, as with steady and a long term rise in the value of goods and services, economic growth increases.

b. Increase in Per Capita Income- PCI refers to the average income, i.e. total income divided by the total population of a country. It is an important indicator of economic growth. An increase in PCI takes place when the increase in total income is greater than the increase in population.

c. Increase in Per Capita Consumption- PCC is calculated by dividing the total private consumption by the total population of a country. It is an indicator of economic growth as it denotes the standard of living and the total welfare of the people of a country. Higher the per capita consumption, higher will be the economic growth.