At the beginning of the twentieth century, most Americans lived under conditions that we would now think of as extreme poverty. Only 10% of homes had flush toilets, only 8% had central heating, only 2% had electricity, and almost nobody had a car, let alone a washing machine or air conditioning.
Economic growth is the growing ability of the economy to produce goods and services.
Such comparisons are a stark reminder of how much our lives have been changed by economic growth, the growing ability of the economy to produce goods and services. Why does the economy grow over time? And why does economic growth occur faster in some times and places than in others? These are key questions for economics because economic growth is a good thing, as those shoppers on Route 1 can attest, and most of us want more of it.