Question

what is the difference between economic output and economic growth?

Answer 1

Economic output measures the value of all sales of goods and services. These might be utilized in later stages of production, traded, or otherwise consumed. This sounds simple enough but in this way, it is the sum of the final purchases and intermediate inputs, therefore resulting in the double counting of intermediate purchases. It is a regular tool to determine whether an economy is growing or contracting by comparing output during two different points in time.

Economic growth is an increase in the the production of economic goods and services, compared from one period of time to another.Traditionally, economic growth is measured by an increase in a country's GDP (gross domestic product). It is an increase in a country's real level of national output which can be caused by an increase in the quality of resources (by education etc.), increase in the quantity of resources & improvements in technology or in another way an increase in the value of goods and services produced by every sector of the economy.

The difference between economic output and economic growth:

1. Economic output refers to the amount of goods and services created over a time period. Economic growth refers to 'increase' in economic output over a period of time.

2. Economic output involves double counting of intermediate purchases. Economic growth is calculated through GDP which adjusts output (using Value added = Gross output – Intermediate Inputs) so as to avoid the problem of double counting.