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Economics glossary · The macroeconomy

Potential growth

What potential growth means in economics, with an example and a question to test yourself.

Definition
Potential growth
Potential growth is a rise in potential GDP, the output an economy can produce by fully employing its labour, capital and technology.
Not to be confused with: Economic growth
Economic growth is a rise in real GDP, reported as the percentage change in real GDP from one period to the next.
Test yourself

What is the difference between potential growth and economic growth?

Learn it properly: the module

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