Economic growth refers to an increase in real GDP or real GDP per capita over time. It is calculated as a percentage rate of growth, typically per quarter or year. There are two main sources of economic growth - increasing inputs like capital and labor, or increasing productivity of those inputs through improvements like education. In the US between 1950-2005, real GDP grew at an annual rate of around 3.5% while real GDP per capita increased 2.3% per year. However, growth rates do not tell the whole story and must be qualified to account for improved products/services and increased leisure over time.

1. EconomicGrowth
EconomicGrowth
An increase in real GDP occurring over some period.
An increase in real GDP per capita occurring over some period.
Economic growth is calculated as a percentage rate of growth per
quarter or per year.
Real GDP per capita= Real GDP/size of the population. That compared
with the values of the previous period are used to determine economic
growth in a country.
The growth of real GDP is more useful for measuring expansion of
military potential or political preeminence.
The growth of real GDP per capita is more useful for comparing living
standards
Economic growth can only occur when BOTH AS and AD increase
Growth as a goal
Economic growth is a goal because if total output increases relative to the
population, real wages will increase and standards of living will therefore
increase.
GROWTH LESSENS THE BURDEN OF SCARCITY
Economic goals are more easily attained and society can take on new
endeavors. However there will always be scarcity present in the world. No
matter what we, as humans, do to satisfy the current wants of people, their
hunger will only grow to greater things.
Arithmetic as a goal
Rule of 70: Approximate number of years required to double real GDP =
70 / annual percentage rate of growth
Example: A 3% annual rate of growth will double real GDP in about
23years: (70 / 3) = 23
Alsoworks for estimating how long it will take a price level to double at
various % rates of inflation or interest
Often times the rule of seventy does not project what is really going to
happen in the future. Because inflation rates change, annual checks on
the inflation rates are done very two years. The rule of 70 only helps us
have a sense of time for what is going to happen in the near or distant
future.

2. Main sources of growth
Two ways to increase real output and income.
Increase inputs of resources (ex: land, labor, capital, and entrepreunial
resources)
Increase productivity of those inputs (ex: improved health, training,
education, and motivation of workers)
About one-third of US growth comes from more inputs, while the
remaining two-thirds results from improved productivity.
Growth in theUnitedStates
Between 1950 and 2005 real GDP in the United States increased about
6 fold as well as the U.S. population.
Real GDP grew at an annual rate of about 3.5% between 1950 and
2005.
Real GDP per capita increased 2.3% per year over that time. However,
merely quantitative values fail to provide the whole picture. Thus, we
must qualify the real numbers in several ways.
o Improved products and services: as the rate of U.S. GDP growth do
not account for the improvements in products and services, they
understate the growth of economic well-being.
o Added leisure: As standard work week has been shortened, the raw
growth rate understate that gain in economic well-being.
o Other impacts: If growth debases the physical environment, the
bare growth overstate the gains in well-being.
Relativegrowthrates
In the past half-century, USA's economic growth has been falling behind
Japan, Germany, Canada, Italy and France.
More recently, USA's growth has started to rev up, with the growth rate
exceeding those of Germany and Japan.