Advantages of Economic Growth

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

Rising national income boosts living standards
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.