How is economic growth primarily measured?

Economic growth is primarily measured by the increase in output and income, which is most commonly assessed through metrics like Gross Domestic Product (GDP) or Gross National Product (GNP). These indicators reflect the total value of goods and services produced over a specific time period within a country’s borders (in the case of GDP) or by its residents (in the case of GNP).

GDP and GNP serve as fundamental tools in economic analysis by providing a clear and quantifiable measure of economic activity. They capture the extent of production and consumption in an economy, which directly correlates to growth. As the economy expands, typically more jobs are created, leading to rising incomes and increased spending, which further stimulates economic activity.

In contrast, while the Human Development Index (HDI) measures broader aspects of well-being including health, education, and income, it is not a direct measure of economic growth. Quality of life indices and social well-being metrics focus on living standards and personal satisfaction rather than purely economic output. Environmental sustainability metrics primarily assess the ecological impact of economic activity rather than its growth rate. Thus, the clear measurement of economic growth is best encapsulated through GDP or GNP, making this the most accurate answer.