The term Gross Domestic Product (GDP) refers to the value of all goods and services produced in the country during a given period, which is usually one year.
GDP is often used as a measure of how well we are doing as a country. If GDP falls, the country is not producing as much. Another important measure that is of interest to many
people is GDP per capita. This is the amount of GDP per man, woman and child in the country and is used to evaluate how well off people in the UK are compared to people in
other countries. The rate of economic growth is a general indication of the increase or decrease in the country’s wealth over time and its people's standard of living.
Put in simple terms, if wages grow at 1.8% per year net of inflation, your real income double every 40 years. If they increase at 3% per year, due to faster economic growth,
your income will double every 24 years. Economic growth is boosted by increased productivity when individuals and businesses turn the same input into more goods and services.
Every generation finds new ways to produce more cost effectively often due to new technology or by working smarter.
Economic growth is also important for government because as your income rises, you pay more tax, which makes it easer for government to pay for the services it buys, such as
schools, hospitals, and roads.
To Summarise:
- Gross Domestic Product (GDP) is the value of all goods and services produced in the country within a given period.
- GDP per capita is the amount of GDP per person in the country
- The rate of economic growth is measured by the percentage change in GDP
- All of the measures tell us how well the economy is performing
- Countries like economic growth because it raises the standard of living