Economic growth is a key indicator of an economy's health, measured by the gross domestic product (GDP). GDP represents the total market value of all goods and services produced within an economy over a year. An increase in GDP, adjusted for inflation, signifies economic growth, while a decrease indicates contraction. This cycle of expansion and contraction forms the business cycle, which includes phases of prosperity, recession, depression, and recovery. High employment is crucial for a strong economy, as it enables people to spend money on goods and services, driving demand. The unemployment rate, which rises during recessions and falls during periods of economic expansion, serves as a vital measure of economic health. Ensuring jobs are available for those who seek them is a fundamental goal, as employment directly influences consumer spending and, consequently, the GDP. Price stability is another essential goal, aiming to keep the average prices of goods and services steady. Inflation, characterized by rising prices, and deflation, marked by falling prices, can both destabilize the economy. The consumer price index (CPI) is a critical measure of inflation, tracking the price changes of a basket of goods and services over time. Maintaining price stability helps individuals and businesses manage costs more predictably.
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Understanding the Economy: Growth, Employment, and Stability

Economic growth is a key indicator of an economy's health, measured by the gross domestic product (GDP). GDP represents the total market value of all goods and services produced within an economy over a year. An increase in GDP, adjusted for inflation, signifies economic growth, while a decrease indicates contraction. This cycle of expansion and contraction forms the business cycle, which includes phases of prosperity, recession, depression, and recovery.

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