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.

TW
Answered by Thomas W. Economics tutor

57497 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

With reference to a poverty trap (poverty cycle), explain how “investing in human development is crucial to ... reducing poverty”


Following Teresa May's Brexit speech, the UK exchange rate in terms of euros depreciated from 1.13 to 1.08. If a firm sells 20000 units at 4 euros per unit, what is the difference in the firms revenue following the change in the exchange rate?


How should put in my essays for 25 mark questions?


The elasticity of supply of frozen pizzas is likely to be more elastic than the supply of fresh vegetables. Do you agree with this statement?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning