How is economic growth typically measured?

Economic growth is typically measured by the increase in Gross Domestic Product (GDP) over time. GDP represents the total monetary value of all finished goods and services produced within a country's borders in a specified period. When GDP increases, it indicates that the economy is doing better, producing more goods and services, and generally reflecting improvements in living standards.

Measuring economic growth through GDP is essential because it provides a comprehensive snapshot of a country's economic performance. It captures various sectors of the economy, including consumer spending, business investments, government expenditures, and net exports. Tracking GDP growth helps policymakers, businesses, and investors make informed decisions based on the overall health and growth trajectory of the economy.

In contrast, assessing population growth does not directly indicate economic performance, while evaluating production costs relates more to businesses' operational efficiency rather than overall economic health. Changes in interest rates can influence economic activity but are not used as a direct measure of economic growth. Therefore, the most significant indicator of a country's economic growth is indeed the increase in GDP over time.