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.