If we want to measure the economic growth in our nation then it has to be done in a very narrow way. That narrow way is to look at the gross domestic product or G.D.P. For this topic we will use three important and widely accepted yardsticks, those being gross domestic product per capita, gross domestic product per dollar GDP growth and interest rates as percentage of gross domestic product. By considering these three economic performance yardsticks we can better define the health and pace of our economy.
In this article I will use the standard definition of economics, which states that economic growth is the increase in the rate of return to an investment or saving, with the net effect of other factors such as depletion of resources. This definition is related directly to the discipline of macroeconomics. Macroeconomics is the study of the economy as a whole while microeconomics is the study of economic indicators within a country or area. In this article I will compare the economic growth in our nation with other countries and illustrate the fact that a narrow economic growth definition is necessary to properly evaluate our nation's economic health. It is important to note also that economic growth is different for different time scales.
The comparison can be made using both PPT and NPV based measurements for economic growth. The first measure of economic growth used in a PPT measure is the Gross Domestic Product or G.D.P. which is defined as the value of all final goods and services produced in a country in a year. For example, if it measured the value of all the cars manufactured in the United States in 2021 then that would be considered a valid economic growth definition because in that case the value of all products manufactured in the United States was increasing.
A measure of economic growth that is based on P.D.P. is the gross domestic product per capita. This is defined as the value of all products that are produced in a country and in particular that is produced within each individual county in that country. If it were measured on an annual basis then the value of all products that are produced in a country each year would be equal to the total economic production of all counties in a country. This is what we called a P.D.P.
The P.D.P. can be compared against a standard economic activity definition. This is a monetary measurement of the value of an economic good. Let's use the car for example. If it is determined that the car is worth five hundred dollars then it would be classified as a monetary good. That would then be compared against the Gross Domestic Product and the standard economic activity level to determine the quality of the standard of living in the country.
One possible negative consequence of . . . . . . the P.D.P. is the inflation of goods. Let us consider the car above again. Given that it is being sold for five hundred dollars and it has only been used for two months, then the car has dropped in its value. Given this negative interpretation of the P.D.P., the economic growth definition of economics may be considered to have an inflated view of the quality of the standard of living in the country.