Association of Chartered Certified Accountants (ACCA) Certification Practice Test

Which of the following best describes the concept of economic growth?

1. An increase in job vacancies

2. A rise in national output over time

3. A decrease in unemployment rates

4. A reduction in resource utilization

The correct answer is: A rise in national output over time

The concept of economic growth is best described by the rise in national output over time. Economic growth represents an increase in the production capacity of an economy, typically measured as the percentage change in real GDP (Gross Domestic Product) over a period. This growth reflects enhancements in productivity, which can stem from various factors such as technological advancements, increased capital investment, and improvements in labor efficiency. When national output rises, it indicates that the economy is able to produce more goods and services than before, leading to improvements in living standards and overall economic health. This continuous expansion also showcases that there is more economic activity, which can spur job creation and potentially decrease unemployment, although these are secondary effects rather than the core definition of growth itself. The other options describe related but distinct concepts. An increase in job vacancies relates more to labor market conditions rather than growth itself. A decrease in unemployment rates can be a result of economic growth but does not define it. A reduction in resource utilization would typically indicate inefficiency or economic contraction, contradicting the idea of growth. Therefore, the best description of economic growth is indeed the rise in national output over time.