Modern Economics

Economic Growth or Economic Development can be defined as a process of sustained increase in real national income over a long period of time National income is the sum total of the value of all final goods and services produced in the country during one year, calculated after making some necessary adjustments. To find the real national income, the money value of final goods and services is deflated by the price index to eliminate the changes mat might have taken place in the value of national output, owing to changes in the price level. This rate of increase in the real national income indicates the growth rate of an economy. From the viewpoint of economic growth the increase in the real national income should be over a substantially long period of time. A sudden expansion of economic activity over a short period is not the indicator of economic growth because it may soon be followed by a recession. Economic growth implies a sustained expansion of economic activity over a long period of time.