Economic growth represents the long-term increase in an economy's value, while the business cycle depicts short-run fluctuations in economic activity. Real GDP tracks an economy's growth trajectory over time, reflecting periods of growth, recession, or depression.
Economic growth refers to the long-term increase in the market value of goods and services produced by an economy, usually measured by the percentage increase in real gross domestic product (real GDP). While short-run fluctuations in economic growth are part of the business cycle, the long-run trend of real GDP tracks the overall growth trajectory of an economy.
The business cycle encompasses the phases of expansion and recession experienced by economies over time, depicting fluctuations in production, trade, and economic activity. Expansion and recession periods within the business cycle influence short-run economic growth, distinct from the long-run upward trend represented by economic growth.
Real GDP data reflects how an economy is performing over time, showing periods of growth, recession, or depression. Understanding these fluctuations is essential for policymakers and economists to assess the health and trends of an economy.
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