Economic growth is the

Step 1: Analyze the question The question asks for the definition of economic growth.

Step 2: Explain the concept Economic growth is the sustained increase in a country's output of goods and services over time. It is usually measured by the rate of increase in real GDP (real national output). It happens when the economy's productive capacity grows, for example through more labour, more capital, better technology, or better resource use.

Step 3: Evaluate the options

• A. Growth in life expectancy: This is a human development indicator, not economic growth.
• B. Increase in population: This is demographic growth. Population can grow while output per person falls.
• C. Rate of increase in aggregate demand: Aggregate demand can rise through price increases (inflation) without any increase in real output, so this does not define growth.
• D. Rate of increase in a country's full employment and real output: This is closest to the textbook idea. It links growth to real output and the productive capacity of the economy, meaning output at full employment.
• E. Rate of increase: This is incomplete, because it does not say what is increasing.

Step 4: Answer The wording is a little loose, since growth is strictly about real output, with full employment output reflecting potential capacity. Among the options, though, it is the only one that refers to real output, which is the core of the definition.

Step 5: Exam tip When you see "economic growth", look for the words real output, real GDP, or productive capacity. Reject options about population, life expectancy, or money values (such as nominal demand), because these do not measure real production.