Final answer:
A change in economic output over time is measured by the GDP growth rate and reflects how much production has expanded (positive) or contracted (negative). Long-term growth is influenced by productivity, investment, and population changes.
Step-by-step explanation:
A change in economic output over time is typically measured by the GDP growth rate. This reflects whether the production of a country has expanded or contracted. The real GDP growth rate can be either positive, indicating an expansion of production, or negative, which suggests a contraction. In the United States, long-term real GDP growth has typically ranged between 2% and 4%. The rates depend on a variety of factors, including population growth, investment in physical and human capital, technological advances, and more.
Impact of Population on GDP
It’s important to consider population growth in relation to GDP. If population grows faster than GDP, overall GDP may increase, but GDP per capita decreases. Conversely, if GDP falls but population declines at a faster rate, GDP per capita can still increase.
Business Cycle and Long-Term Growth
The volatility of GDP growth, known as the business cycle, reflects short-run fluctuations due to factors like investment levels and consumer spending. However, long-term economic growth is often tied to productivity increases, represented by a shift to the right of the aggregate supply in the AD/AS diagram.