Discuss the extent to which economic growth may benefit the economy

A rise in per capita GDP signals growth in the economy and tends to translate as an increase in productivity. (Investopedia, n.d.)

Economic growth is an increase in the capacity of an economy to produce goods and services from one period of time to another. In simple terms, it refers to an increase in aggregate productivity.

In general, the main cause for economic growth is the increase in mass demand. As the population demand for more goods and services, the more of it will be produced. Therefore, the demands will raise the level of real GDP (gross domestic product).

GDP is the calculation of the total goods and services produced in one year. It measures the economy's size and compares how the economy performs in other countries. GDP is measured in three different ways, as the value of goods and services produced, as domestically produced goods and services spending, and as a factor income from firms. With the value of goods and services produced, GDP is calculated by adding the goods and

When we have a recession our GDP fall below our growth trend causing the economy to contract because of deflation. During a contraction we have higher unemployment because demand goes down and firms are producing less. The generally goal is to keep unemployed between a rate of four to five percent. The unemployment rate can be calculated by the number of the people unemployed divided by the size of the work force multiplied by one hundred. During the business cycle we don’t want our GDP to expand or contract to far away from the growth trend. The new growth theory of the 1970 has given economist a new way to look at the study of economic growth and made it a big topic in macroeconomic research. Economic growth tries to explain how fast a nation’s production and average standard of life expands from one decade to the next. It is measured in real GDP. The increase in real GDP means there has been an increase in the nation’s output and expansions. Economic growth is important in macroeconomic because it helps to create a better living standard and creates new jobs. When we have economic growth there is an increase in income and

When comparing the economic growth performance of the United States and the United Kingdom, a major indicator is ‘Economic growth’, which measures the yearly rate of development rate of GDP using the

The economy continues to improve despite the last couple of years, by having an increased number of government budgets, increases number of efforts to reduce the public debt levels, and an export oriented growth

Measuring GDP will give the county a good idea of its economic performance. This will help the government assess the current economic activity and standard of living. Therefore a rise in GDP will suggest better living standards, increased economic activity that would generate more jobs leading to individuals having more disposable income to spend on things. Increased spending in the economy would give business more confidence to increase their investments, which benefits future growth. Rising GDP would mean better public services are offered like improvements in the field of education, better healthcare and national security. On the other hand if GDP increases rapidly then it could also have a negative effect on the economy. Increasing GDP would lead to higher inflation as people are purchasing more products then there is an incentive to increase prices. This would further have pressure on interest rates to rise, leading to a decrease in competitiveness both in the domestic and international markets. As nominal prices rise, real wages have to rise in accordance for people to afford products and this leads to rise in unemployment. Also in places like China rise in GDP has been associated with a rise in pollution levels from factories which can have a

Taking into consideration the trickle-down theory of economics by Lewis, if the growth in economy is not sufficient to satisfy the needs and wants of the upper sections, nothing or very little shall trickle down to the lower sections in the hierarchy of society. Thus, the gap between the rich and poor widens and though economic growth has impacted a certain section of society, this cannot be considered development. Another example is an increase in the defence output of a nation, which accounts for an increased GDP but does not in any way contribute to economic development. Economic growth is not enough in itself to measure economic development as even if there has been a leap in the income of people in a particular nation,

Firstly, it exerts economic growth. This is because government may have the available funds and therefore spends it on infrastructural development. As infrastructural development occurs, it is in a way creating jobs in the labor force. When that occurs more investors enter into the country to invest thereby creating more jobs leading to an increase in government revenue and high economic growth. When that happens, it is more beneficial to

Economic growth refers to the rate of increase in the total production of goods and services within an economy. Economic growth increases the productivity capacity of an economy, thereby allowing more wants to be satisfied. A growing economy increases employment opportunities, stimulates business enterprise and innovation. A sustained economic growth is fundamental to any nation wishing to raise its standard of living and provide a greater well being for all. Gross domestic product (GDP) is the monetary value of all final goods and services produced over a year. It is the total value of production within the economy. The total value of production is the total value of the final goods or services less the cost of

In earlier times Gross Domestic Product was one of the main indicators to measure a country’s wealth. Gross Domestic Product (GDP) is defined as the total value of all the goods and services produced by a nation in any given year ("Is the Gross Domestic Product (GDP) a Good Measure of Prosperity?"). There are two ways of calculating a country’s GDP. The first is the income approach which is calculated by adding the wages of workers, income from rent, interest and profits. The second, more common form of calculating GDP, is the expenditure approach. Here GDP totals consumption expenditure, investment, government spending and net exports. GDP statistics are considered to reflect a county’s economic output which could possibly lead to growth. However GDP is a measure of income and it should not be confused with wealth. Which is why most modern economists do not consider GDP to be a good measure of a

Economic Prosperity: Government got the power to modernize the industry, communications and transport for the best interest of the nation. So rapid growth of industries causes economic prosperity in the country.

This research also shows that economic growth, on average, raises incomes for both the rich and the poor. It helps to lift the poorest in society out of absolute poverty and does not automatically increase inequality. More importantly, no country has managed to lift itself out of poverty without integrating into the global economy.

Economic growth indicates the positive change in real GDP and for the longest time, economists have successfully convinced the majority of people that economic growth should be sustained. As nations move further away from the poverty line, their standards of living tend to improve, which means that people are able to live longer and healthier lives. As a result, sustaining economic growth has become an incentive for people to become better economists, politicians, scientists, and engineers. Although most scholars advocate economic growth, other scholars argue that economic growth is no longer necessary.