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What is economic growth and how can it improve living standards?

Economic growth is defined as an increase in the productive potential of an economy. It is measured in percentage growth of GDP (Gross Domestic Product), year on year. India's rate of economic growth is 7.1% in 2016 Q1.

Growth can lead to higher living standards because if GDP rises, there is more money in the domestic economy. This means that business can make more profits, and therefore can pay employees higher wages, or even hire more employees. This means that GDP per capita/ household rises. Therefore the disposable income of workers rises. This means that they can purchase more goods and services with their income, leading to a rise in living standards.

Thomas  W. A Level Economics tutor, GCSE Economics tutor

6 months ago

Answered by Thomas , a GCSE Economics tutor with MyTutor


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