Sustained economic growth is a major objective of government policy – not least because of the advantages that flow from a growing economy.
- Higher Living Standards – for instance measured by a rise in real national income per head of population
- Employment effects: Growth stimulates higher employment.
- Fiscal Dividend: Growth has a positive impact on government finances - boosting tax revenues and providing the government with extra money to finance spending projects
- The Investment Accelerator Effect: Rising demand and output encourages investment in new capital machinery – this helps to maintain the growth in the economy by increasing long run aggregate supply.
- Growth and Business Confidence: Economic growth normally has a positive impact on company profits & business confidence – good news for the stock market and also for the growth of small and large businesses alike
And an expanding economy provides the impetus for a rising level of employment and a falling rate of unemployment.
Posted on Wednesday, 23 of May, 2012.