Economic growth is defined as the increse experienced by a country's GDP from one period (year) to another.
The Gross Domestic Product (GDP) is the measure which agreggates the monetary value of all goods and services produced in an economy during a certain period of time, generally one year. This global figure is constituted by the following elements:
GDP = C + I + G + XN
where,
C = household's consumption
I = private investment
G = public expenditure
XN = net exports = exports - imports
The GDP is the result of adding these elements. Therefore, <u>the larger the quantity of any of them, the larger the final GDP figure will be. If the GDP is larger, compared to a former period, there is economic growth.</u>
Economic growth can result from a(n) increase in government expenditures and a(n) increase in net exports. Although it should be noted that this is not always true.
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