What does the term 'economic growth' refer to in capitalism?

The term 'economic growth' in capitalism primarily refers to an increase in the production and consumption of goods. This growth is often measured by the rise in the gross domestic product (GDP) of a country, indicating that more goods and services are being produced and consumed over a specific period. When economic growth occurs, businesses expand, invest in new technologies, and create more job opportunities, leading to a favorable cycle of increased production capacity and consumer spending.

The focus on production and consumption is crucial in capitalism, as it reflects the system's core principle of meeting consumer demand and fostering innovation. A healthy economy typically sees a dynamic interplay between these elements, where growing production capabilities fuel higher consumption levels, further encouraging economic expansion.

Other options, while related to economic conditions, do not encapsulate the essence of economic growth in the capitalist context. For instance, a decrease in unemployment rates, although desirable, is a potential outcome of economic growth rather than its definition. Improvement in government policies can support growth but does not directly define it. Similarly, reduction in taxes for businesses may incentivize growth but is not synonymous with the concept of economic growth itself. Hence, the best choice to define 'economic growth' within capitalism is the increase in production and consumption of goods.