Economic growth leads to increases in standards of living from "summary" of Principles of Macroeconomics by N. Gregory Mankiw
When an economy experiences economic growth, it means that the economy's total output of goods and services is increasing over time. This growth is measured by the percentage change in real GDP, which is the total output adjusted for inflation. As the economy produces more goods and services, incomes rise and people are able to consume more. This increase in consumption leads to higher standards of living for individuals in the economy. When incomes rise due to economic growth, people are able to afford more goods and services that improve their quality of life. For example, individuals may be able to purchase better housing, healthcare, education, and leisure activities. As people's basic needs are met and they have more disposable income, they can enjoy a higher standard of living with access to more goods and services that improve their well-being. Moreover, economic growth can lead to improvements in technology and infrastructure, which can further enhance living standards. With advancements in technology, productivity can increase, leading to higher incomes and more efficient production of goods and services. Additionally, investments in infrastructure such as transportation, communication, and energy systems can make it easier for businesses to operate and for individuals to access goods and services, further raising living standards. Furthermore, economic growth can create job opportunities and reduce unemployment rates, providing more people with the means to support themselves and their families. When more individuals are employed and earning incomes, the overall standard of living in society improves as more people have the financial means to meet their needs and desires.- Economic growth is essential for increasing standards of living as it leads to higher incomes, improved access to goods and services, technological advancements, infrastructure development, job creation, and overall well-being for individuals in society. As the economy grows, individuals benefit from a higher standard of living with greater opportunities for prosperity and happiness.
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