This is represented in the chart below which plots the production of right shoes versus left shoes. Resources required to produce each of these products are very similar. Economic Growth Economic growth is the increase in the economy's level of production. Recall that the production possibilities frontier shows the possible production of two goods given the available resources and technology . Economic growth can occur because either the resource base expands, or the level of technology increases.
Economies grow when population grows because labor is an important resource.
The United States economy grew from a population of about 5 million in 1800 to over 90 million in 1900. This was a time of massive resource growth in our nation's history. Economic growth also occurs when we learn how to use our existing resources more productively. This is what we call technological progress. For a given amount of resources, the economy's level of output increases.