Understanding Economic Growth and Cycles

3. ECONOMIC GROWTH a. Economic Growth Defined (page 8)

Economic growth is defined as real growth in the volume (value) of goods and services produced

by an economy over time. Measuring how much Goods and services a country can make

in one year. b. The 3 Basic Economic Questions (what, how and for whom

to produce) (Page 7) There are 3 basic questions which dictate how an economy

works. (1) What to produce? Decide which goods and services to make.

Example: Food, clothes, cars, or computers? (2) How to produce?

Decide the way to make them. Example: Use machines or human labor? Use renewable or