Economic Growth And Inflation

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Economic growth and inflation is one of the big issues that study in macroeconomics while economic growth is calculating by measure the changes in the real Gross Domestic Product (GDP), however inflation refers to the increase in the overall price level. During economic expansion, economic is growth with increasing rate from year to year but this do not means that inflation is increasing too. Recession is a period where the demand for the products of most businesses declines, causing a fall in sales, production and employment for 2 consecutive quarters. Investment also one of the component in GDP that will affect the most during recession or expansion of economy. When economy is facing recession, where aggregate output declines will cause to low economic growth or negative economic growth. On this time, inflation rate will be higher. This can be understood that the relationship between economic growth and inflation is not linear. For instance, when inflation rate is low, the relationship between economic growth and inflation is positive but negative for high level of inflation.
Over the years, Canada’s economy is performed better than Austria with higher economic growth however both countries are the listed in High Income OECD countries which defined by the World Bank as a country with a gross national income per capita above $9,266 in 2000. This income per capita will adjusted every year, high income country may be classified as developed or advanced economies. In the
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