Economic growth means producing more output

1. Real output is the quantity of goods and services an economy actually produces, counted once the effect of rising prices has been stripped out.
2. Growth is measured for the whole economy, so one firm expanding is not economic growth even if that firm doubles in size.
3. The figure is normally given as a percentage change rather than as an amount, which makes one year comparable with the next.
4. Positive growth means real output is higher than in the previous period and negative growth means it has fallen, so the economy has become smaller.
5. Growth can also speed up or slow down while output is still rising, because the rate changes from year to year.

Growth raises incomes, jobs and tax revenue

1. Producing more usually means firms need more workers, so employment tends to rise as the economy grows.
2. Firms selling more pay out more in wages and profits, so household incomes tend to rise alongside output.
3. Higher incomes let households buy more goods and services, which raises material living standards.
4. Growth also gives the government more tax revenue without raising a single tax rate, because incomes, profits and spending are all larger.

Governments treat growth as a central aim

1. Because growth raises incomes and employment, most governments treat it as one of their main economic objectives.
2. Steady growth helps reduce poverty, since it puts more people into paid work and raises real wages.
3. Growth compounds, so a country that grows a little every year produces far more within a generation than one whose output stands still.

Whether that extra output is worth what it costs is weighed up in 3.1.6.