Final answer:
A steady, long-term increase in real GDP is referred to as economic growth, which is a critical factor in the expansion of a country's economic capacity and standard of living. The dynamics of economic growth are closely linked with the business cycle, which includes fluctuations in economic growth rates and potential periods of recession or depression.
Step-by-step explanation:
A steady, long-term increase in real GDP is referred to as economic growth. This concept involves the expansion of the economic capacity of a country over time. Economic growth is measured by the increase in the value of all goods and services produced in an economy, adjusted for inflation, which is presented as the real Gross Domestic Product (GDP).
When analyzing economic growth, it is vital to consider the business cycle, which consists of periods of expansion (growth) and contraction (decline) in the economy. The business cycle's peak marks the transition from a period of expansion to contraction, during which a recession may occur if there is a significant and sustained decline in GDP. A recession is defined as two consecutive quarters of negative GDP growth. If a recession is prolonged and severe, it may lead to a depression.