Robyn Mathews AS Economic

Robyn Mathews AS Economics

Discuss the extent to which economic growth may benefit an economy.

7)Economic growth will benefit an economy to an extent. Economic growth will result in an increase in the output of goods and services, raise tax revenue, may lower unemployment and so reduce government spending on unemployment related benefits.

However economic gwoth may not benefit an economy as there may be disadvantages of economic growth including an opportunity cost in the short run, pollution, depletion of non-renewable resources and stress the consequences of economic growth will depend on the nature of the growth, how it is achieved and how the benefits are distributed.

The effects of economic growth will be influenced by the type of extra products produced. For example, if more consumer goods and services are made, living standards will rise now. If more capital goods are made, it may take a little while for living standards to increase. If more weapons are made, people may not feel better off  For living standards to rise, real GDP has to increase by more than population, so real GDP per head increases If income is unevenly distributed, only a small proportion of the population may benefit for economic growth. The more sustainable economic growth is, the more beneficial it is likely to be.

Avoiding depleting non-renewable resources and pollution, is more likely to enable economic growth to continue for future generations. Outcome will depend on the nature of economic growth i.e. whether it is short or long run.  Economic growth resulting from a shift of the aggregate demand curve to the right may be associated with inflation whilst potential economic growth resulting from a shift to the right of the aggregate supply curve may reduce inflationary pressure Economic growth caused by shifts of both the AD and AS curves will last for longer than economic growth resulting from just a shift in one curve.

 Economic growth may have both costs and benefits for economic growth to be beneficial the benefits must outweigh the costs. As economic growth is a macro economic objective for most governments this suggests most countries regard economic growth as beneficial.c