Economic growth can be measured by an increase in which of the following?

Disable ads (and more) with a membership for a one time $4.99 payment

Prepare for the UCF ECO3203 Intermediate Macroeconomics Exam. Study with interactive flashcards and multiple choice questions, each providing insightful hints and explanations. Get ready to excel in your exam!

Economic growth is best measured by an increase in real GDP per capita because it provides a more accurate representation of the standard of living and economic well-being of individuals within a country. Real GDP adjusts for inflation, allowing economists to assess the true growth of an economy by reflecting the value of goods and services produced, while per capita figures account for population changes, ensuring the measurement is relevant to the average citizen's experience.

Nominal GDP, while indicating the total economic output, does not correct for inflation and may misrepresent actual growth when prices are rising. Government spending can contribute to economic activity, but it is not a direct measure of economic growth; instead, it can be a component of GDP. Lastly, inflation rates indicate changes in price levels rather than real economic growth, as high inflation could distort perceptions of growth in output. Thus, real GDP per capita stands out as the most comprehensive and useful indicator of economic growth.