Question

What factors affect a country's economic growth rate? Does government have a role to play in the long-run growth process?

Answer 1

Six Factors affects a country’s Economic Growth rate:

• Natural Resources.
• Physical Capital or Infrastructure.
• Population or Labor.
• Human Capital.
• Technology.
• Law.

Yes, governments have a role to play in the long run growth process. Monetary and fiscal policy are used to regulate the economy, economic growth, and inflation so that long-run growth is possible. Government activities used to improve long-run growth include stimulating economic growth, enacting monetary policies, fixing the exchange rates, and using wage and price controls.