The debate in the minds of most of us revolves around the term “economic growth” and “economic term”. But what do we actually mean by these terms? Let us take a closer look into the various definitions of these terms to have a clear idea of what we are talking about. The definition below is taken from a popular business textbook, “Macroeconomics”.
Economic growth means different things to different people. For some, it is the value of goods and services sold at retail prices over a certain period of time. It could also be the rate at which money is being spent. For others, economic growth is the overall performance of the economy. But generally, when we use the term “growth” in this context, it means improved levels of per capita income. The standard (conventional) definition of economic growth is based on gross domestic product (GDP).
The term “monetary” in the context of economics simply refers to the activities of banks and other financial institutions. In economic terms, monetary growth occurs when a rise in the level of interest rates is combined with an increase in base interest rates. When you study macroeconomics, the term “monetary” also refers to total national debt as measured against GDP. The concept of “monetary” is very important in international economics and in international trade.
The term “reinvestment” in economic theory is used to mean increasing the flow of money into a process of production. In simple terms, economic growth means increasing the level of investment. This is sometimes equated with the term “stimulus package”. To be clear, the notion that economic stimulation will lead to economic growth should not be confused with the idea that the government should inject money into the economy for the purpose of driving economic activity.
Economic growth in the United States has been gradual over recent years. The stock market crash of course, was felt all over the country. However, overall economic performance has remained relatively strong. There are many theories that attribute this strength to varying factors including changing consumer attitudes towards saving and spending, improvement in consumer credit markets, and improvements in economic infrastructure. However, whatever the cause, the underlying fact remains: The level of economic activity has been on the increase. Here are some more things that we think you should know about.
What do we mean by economic growth when we talk about federal income taxes? The term “tax” refers to the payment of a tax by an individual or family. As such, the term refers to both personal income taxes and corporate income taxes.
What do we mean by economic growth when we talk about the Federal budget deficit? This term refers to the difference between actual outlays (the amount of money spent or earned) and the gross domestic product (GDP). Over time, this gap will widen as a result of economic activity. So, as you can probably surmise, it is necessary to talk about this term frequently. In particular, when discussing Federal deficits, it is important to understand what it means to the . . . . . . American public.
What do we mean by economic growth when we talk about economic policy? This term refers to the overall economic policies of a country. For example, a healthy economy means a healthy currency. This is a long-term interest rate that banks will want to offer. Similarly, a stable economic policy means one in which interest rates are low and economic activity is robust. When discussing the topic of economic policy, it is important to remember what do we mean by “economic growth.”