Is it basically the average person spent £100 last month, and £105 this month so the economy grey 5%?
In: Economics
An economy grows if it makes more things than it did in the previous period(e.g last year).
If last year France made 2 guns and 10 butters(and nothing else) and this year it made 3 guns and 11 butters, it has grown. If a gun costs 10 and a butter costs 1, France made 30 units last year and 41 units this year. To calculate growth, (present -past)/past, x100 if you want a percentage. In this case, France grew 37%.
How might France have produced 1 extra gun and 1 extra butter? Lots of ways. France might have experienced population growth, meaning there are more people to make things. In that case France grew, but per capita it did not. There might have been a technological change, e.g a better butter making machine. Alternatively, foreigners might have realised that France is a great place to make guns and butter(cheaper milk and less rules than other countries for example), so invested money to make guns and butter in France. There are lots of other ways for an economy to grow. In modern economies, a small amount of growth is natural. In most countries education keeps improving a little bit and people keep learning over the course of their careers. If people leave school at 20 and retire at 60, assuming the number of people working doesn’t change, the 59 year olds learn a bit from the 60 year olds so when everyone gets a year older(and the second group retires), the new 60 year olds are better at their jobs than the old ones. Likewise, because education is constantly improving, the new 20 year olds are clever than the 21 year olds were last year.
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