to what extent is economic growth beneficial for global economies?

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To what extent is economic growth beneficial for global economies? Economic growth is defined as the expansion of the productive capacity of an economy. An increase in resources causes an area to produce more goods or services in a given period of time – as shown on a production possibility frontier (PPF) diagram, where the curve shifts outwards. The PPF is a curve showing the maximum combinations of goods and services that can be produced in a given period with available resources. The improvement in economic efficiency is shown on the diagram where the curve shifts from PPF1-PPF2, which could be as a result of an increase in the total stock of resources available. An AS/AD diagram can also define the term economic growth through the…show more content…
Many people moved from rural to urban areas to get jobs in the rapidly expanding industries in many large towns and cities. The major benefit of economic growth is quite clearly the boost to the economy in the country, which consequently causes an increase in real income per head of a population. This can increase the living standards in the country as people have more disposable income to spend on luxury goods. Also, the growth of the economy attracts companies to the country and adds to the economy, therefore supplying more jobs in these new companies. The rise in employment triggers the multiplier effect, as new workers therefore have larger incomes and spend more money on local businesses in the area etc. This was illustrated in the UK, for example during the 1990s the number of people in work has rose by around 26 million in 13 years. The boost in the economy also provides the government with extra money to improve public services such as education and healthcare. Not only this, but the government can also fund low-carbon investment, innovation, research and development, resulting in more efficient production processes to reduce costs, as well as protecting the environment. To conclude, economic growth is quite clearly beneficial for global economies in the present day. There is great improvement in the standard of living, rising unemployment, greater business confidence and potential environmental benefits due to
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