Economic Growth

Labor productivity growth is the only thing that makes an economy grow in the long run.

Firms produce output through a combination of capital and labor.

Capital includes money, machinery, and intellectual property.

The growth level is the starting value of whatever is growing; the growth rate is the change in the growth level from year to year.

If increasing economic growth now results in relatively poorer long-term economic growth, politicians may be tempted to trade an increase in the growth rate (and their current approval ratings) for a slightly lower economic growth level.