Actual economic growth is the measurement of economic activity or output that has been produced during a period of time. Economic growth can also be defined as the change in the market value of goods and services produced by a country during any point of time. Statists conventionally measure this economic growth as the gross domestic product (GDP) growth rate, or gross national income (GNI). There are many ways of measuring actual economic growth, but the most common is through gross domestic product measurement.
The concepts of actual economic growth are important for the functioning of a country. This is because when a country grows, so does the rest of the world economy. To illustrate, when a country has an economic boom, other countries feel the pressure of this increased activity on their economy. In turn, countries with poor economic growth have to increase their activities in order to catch up to the rising power of the domestic economy.
There are several theories about why actual economic growth occurs. One of them is the theory of demand and supply. Basically, the theory of demand and supply says that the quantity of a commodity that is bought or sold, tends to follow the natural tendency of its price to rise. Another theory of economic growth is the theory of productivity. It says that the actual economic growth is associated with the level of production of a country's output of particular goods and services. These products and services are measured using statistical data like the Purchasing Managers Index (PMI), Purchasing Managers Index (PMI-weighted), Purchasing manager indices (PMI-weights), Purchasing Indexes (PI) and Producer Indexes (PI).
One of the main drivers of actual economic growth is investment. Investment refers to the transformation of raw resources into intermediate goods or into more valuable stocks. There are three types of investment: public goods, private goods and assets. A country can invest in any of these three categories as long as these investments create growth in the overall economy.
Private goods investments refer to those done on equipment, buildings and facilities for specific purposes. Public goods investments are done on services that are critical to the smooth operation of the whole economy. Some examples of public good investments are roads and bridges. They also create growth by ensuring the safety of people, the delivery of essential goods and the flow of goods and services throughout the country.
One of the theories about why the actual level of economic growth is also determined by the condition of the economy. According to this theory, when a country has a healthy economy, there is rapid economic growth. On the other hand, when the country has a poor economy, growth is very slow. This condition of a poor . . . . . . economy can also cause an imbalance in the national income, employment and in the distribution of income.
In addition, some believe that the level of economic growth depends on the stock market. When the stock market is flourishing, there is rapid growth. On the other hand, when it is suffering from severe losses, it results in economic decline. The stock market may also affect growth in different ways. It may cause business expansion which leads to more investment, more output and a rise in the level of goods and services available for sale.
No matter what the theory about the actual economic growth in a country is, it is important for individuals to understand how their decisions, actions and choices can affect the economy. They should also be aware of the fact that not everything is going to be positive in the future. It is important to work hard and invest when they see fit. With the right amount of effort, a person can lead a successful and a fruitful life.