Economists typically measure economic growth by tracking the changes in a country’s Gross Domestic Product (GDP). GDP represents the total value of all goods and services produced over a specific period within a country. This measurement provides insights into the size and efficiency of an economy.
When GDP increases, it usually indicates that the economy is doing well and that more goods and services are being produced, leading to higher employment rates and improved living standards. To assess economic growth accurately, economists consider various factors, including consumer spending, business investments, government spending, and net exports.
Additionally, economists often adjust GDP figures for inflation to obtain a clearer picture of real growth, which reflects the economy’s true performance over time. By analyzing these changes in GDP, along with other economic indicators, economists can evaluate how an economy is functioning and make informed predictions about its future direction.