Question

Explain how economic growth can happen? What are some of the needed resources? what makes technology very important? Should policymakers push for more consumption as a way to stimulate economic growth?

Please answer each question above on a separate line/paragraph.

Answer 1

Economic Growth which refers to increase the volume of real value of goods and services in an economic system or the increasing real gross domestic product called economic growth.Which is a considered as a short run phenomina. The way economic growth is determined by different factors like aggregate demand and aggregate supply that means increase in consuption and increase in efficiency of production, impliment government policies enhance the consumption and economic efficiency. And if considersd supply side factors like increasing market competition,free market economy and developmental related government spending like spending in health,education ,and infrastructre are leads to increasing effeciency of production and economy. These are promoting to achieve economic growth.

Aggregate demand increase due to increase in real wage, tax redumption,devaluation of currency, increasing government spending and reduce the interest rate. These factors increasing consumption by increasing aggregate demand. devaluation also promote the export then increase the domestic aggregate demand leads to consumption increase same as increase in real wage increase disposable income thats push up the consumer spending.Thus these factors enhance consumption and leads to economic growth.

On the other hand, supply side increasing productivity through enhancement of the technology. Without technology is an inevitable part of an economic effeciency because technological advancenment means not only technical advancement but in the case of management of physical and human capital area of an industry or market.Because invention and innovations are enhance the economic growth.

Government policies enhancing economic growth are expanisionary fiscal policy means redumption of tax push up disposable income and increasing aggregate demand this will leads to economic groowth.and expanisionary monetary policy means lowering the interest rate boosting the domestic demand and consumption thus leads to attaining the economic growth. If Government can maintain the stable social political and economic system also help the economic growth.

Environmental factors like natural resources like land , oil,water, minerals and good climate promote economic growt. Environmental sustainability increase the economic growth. Not only the natural resource physical and human resources like capital,education , better health , knowledge,and skills are promoting the economic growth.