MEPX
Chapter 5 of 10All chapters

Chapter 5 of 10

The whole economy

Growth, inflation, unemployment.

The main measures

GDP counts production. Inflation measures rising prices. Unemployment counts people seeking work. Each is a useful summary that hides a great deal.

  • GDP ignores unpaid work, distribution and depletion of resources.
  • Real figures adjust for inflation; nominal ones do not, and the difference matters.

Growth

Long-run growth comes from productivity: more output per hour worked, driven by technology, education and capital. Compounded over decades it dominates everything else.