Does inflation lead to GDP growth

Economic growth

Growth, Quantitative Growth, Qualitative Growth


Economic growth. Growth rates of the gross domestic product in Germany
In a broader sense, growth describes the increase in an economic variable over time, e.g. B. in relation to companies (company growth, measured in terms of equity, value added or turnover) or to private households (e.g. growth in disposable income, consumer spending, financial assets). Economic growth is usually given as a percentage change over time in the sense of monthly, quarterly or annual growth rates (see there). Since growth is generally regarded as the normal case, constant economic variables are also referred to as zero growth (stagnation); economic variables shrink from "negative growth".

In the narrower sense, the term growth is related to macroeconomic variables and interpreted as a permanent (long-term) increase in real gross domestic product (GDP). This real growth (see there) means an increase in the domestic product in prices of a base year. Changes in the general price level (inflation rate) in the period under review are eliminated (deflation) in contrast to nominal growth that is not price-adjusted (see there).

In order to emphasize the long-term aspect of economic growth and to distinguish growth from the more short-term, cyclical changes in the national product, instead of the actually generated national product of an economy, its production potential (see there) is used. H. the domestic product that could be generated if the existing stock of physical capital and labor were fully utilized in the production process. If one calculates the GDP per inhabitant, an increase leads to a better material supply of goods for the population. If, on the other hand, the GDP is related to the number of persons in employment, this results in a statement about their productivity (labor productivity).

Economic growth can be viewed from a quantitative, material point of view (quantitative growth) or from a qualitative point of view (qualitative growth). Quantitative growth aims at the purely quantitative increase in macroeconomic production in the sense of an increase in a national product size (e.g. GDP). Qualitative growth In addition to the pure increase in the overall economic production volume, it also includes improving people's quality of life, protecting the environment and ensuring a fair distribution of income. However, measuring the qualitative growth and increasing prosperity in a society is associated with considerable difficulties. In Germany, adequate and steady economic growth is an economic policy goal.

Duden Wirtschaft from A to Z: Basic knowledge for school and study, work and everyday life. 6th edition. Mannheim: Bibliographisches Institut 2016. Licensed edition Bonn: Federal Agency for Civic Education 2016.