Which economic indicator is typically used to measure economic growth?

Gross Domestic Product (GDP) is the primary economic indicator used to measure economic growth. It represents the total monetary value of all goods and services produced within a country's borders over a specific period of time, typically annually or quarterly. An increase in GDP indicates that the economy is expanding, as it reflects higher production levels and increased consumer and business activity.

GDP is comprehensive and encompasses various sectors of the economy, making it a robust measure for assessing overall economic health. Economic policymakers and analysts closely monitor GDP for insights into economic performance, as it can influence decisions regarding monetary and fiscal policies.

In contrast, while the unemployment rate provides insights into labor market conditions, it does not directly measure production or output. The Consumer Price Index focuses on inflation by tracking changes in the price level of a basket of consumer goods and services rather than overall economic output. Finally, the trade balance indicates the difference between a country's exports and imports, which is important for understanding external economic relationships but does not directly capture the total economic activity within the country. Thus, GDP stands out as the most relevant indicator for economic growth.