Class Test:

Let the market basket includes 3 goods such as 10 pens, 5 shirts, and 3 pair of shoes.
Prices of three goods are 0.80, 15 and 35 respectively in 2023 and in 2022 prices of
three goods were also 0.75,12 and 30 respectively. The base year price is 0.15, 7 and
10 respectively. Now find out percentage change in price.
Economic Growth:

The term economic growth refers either to absolute real economic growth or to per capita real
economic growth. Absolute real economic growth is an increase in Real GDP from one period
to the next. Per capita real economic growth is an increase from one period to the next in per
capita Real GDP, which is Real GDP divided by population.
Per capita Real GDP=Real GDP/Population

• Absolute real economic growth refers to an increase in Real GDP from one period to the next.

• Per capita real economic growth refers to an increase from one period to the next in per capita.

Causes of Economic Growth:

• Factors related to economic growth include natural resources, labor, capital, technological
advances, the property rights structure, and economic freedom.

• Countries rich in natural resources are not guaranteed economic growth, and countries poor in
natural resources may grow economically. Nevertheless, a country with more natural resources
can evidence more economic growth, ceteris paribus.

• An increase in the amount of labor or in the quality of labor (as measured by increases in labor
productivity) can lead to economic growth.

• More capital goods can lead to increases in economic growth. Capital formation, however, is
related to saving: As the saving rate increases, capital formation increases.

• Technological advances may be the result of new capital goods or of new ways of producing
goods. In either case, technological advances lead to economic growth.

• Economic growth is not unrelated to the property rights structure in the country. Individuals will
invest more, take more risks, and work harder—thus, there is likely to be greater economic
growth—when the property rights structure allows them to keep more of the fruits of their
investing, risk taking, and labor, ceteris paribus.

• For the most part, the more economic freedom the people of a country experience, the higher the
Real GDP per capita.