Which statement defines economic growth?

• A. An increase in real GDP over time.
• B. An improvement in living standards.
• C. A decline in unemployment.
• D. An increase in HDI.

Answer: (A)

Growth is the sustained increase in what an economy can produce, typically measured by real GDP rising over time. Real GDP is inflation-adjusted, so it reflects actual growth in output rather than just higher price levels, signaling a longer-run expansion of productive capacity due to more resources, better technology, or more efficient production.

That’s why the statement about real GDP increasing over time best defines economic growth. Improvements in living standards can happen because of growth, but they also depend on how output is distributed and other factors, so they’re not the definition itself. A decline in unemployment might accompany growth but is a labor-market indicator, not a measure of growth. An increase in HDI reflects broader development outcomes beyond output growth.