Discuss the extent to which economic growth may benefit the economy
Economics growth is, it the short run an increase in real GDP and in the long run an increase in the productive capacity of an economy (the maximum output that the economy can produce). GDP stands for Gross Domestic Product which is the country’s production of goods and services valued at market price in a given time period. Real GDP is when these figures are corrected for inflation using a base year (The UK uses 2003 as its base year). It can be measured in three different ways; the output measure is the value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, the service sector and government. The …show more content…
If an economy outgrows other economies this could result in what we import being greater than what we export which leads to a disruption in the balance of payments and it’s trade balance will be in defecit.
Ultimately, economic growth may bring a higher material standard of living but in does not take into account happiness. It can lead to negative externalities such as pollution or even crime which reduce the quality of life for some people and can even decrease the value of their homes. It is important that economic growth is sustainable in that it does not impact the potential or the living standards of generations to come, unfortunately with the exploitation on the natural environment and the continuous burning of fossils fuels the current methods of trying to maintain economic growth are far from sustainable.
Of course, economic growth can benefit the economy to a certain extent, we need the economy to grow with population so as to maintain our current living standards and even to improve them and to prevent poverty. Improvements in education and health care are always desirable but we reach a point where government spending can only do so much. Inflation, pollution, a disturbance in the balance of payments, economic growth is only beneficial when it is stable and sustainable. Ultimately material