• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

The Desirability of Economic Growth.

Extracts from this document...


The Desirability of Economic Growth The Benefits of Economic Growth 1. Economic growth means that real GDP has increased and therefore leads to an improvement in the material standard of living. This means that individuals have higher levels of real purchasing power enabling them to buy a greater volume of goods and services - increasing economic welfare ( bearing in mind individuals have unlimited wants ). For instance, as western economies have grown over the decades consider the changes in 'material ownership' of products such as ownership rates of cars, dishwashers, housing, the number of foreign holidays taken - all of which have continued to increase as real spending power has grown. 2. Higher real incomes have enabled individuals to have greater access to leisure time / activities. People can now satisfy their basic wants more easily, with less time worked and hence devote more time to leisure as they do not have to work as long to afford the basic necessities for life. ...read more.


2. With economic growth comes a growth in consumption, more resources are needed reducing the remaining supply of non-renewable resources such as fossil fuels ( oil, gas and coal ), metal ores and other natural resources. As these are used up at a faster rate, there are fewer supplies left for future generations. Thus the finite pool is more rapidly becoming exhausted. The growing affluence of consumers has led to for instance, the ever increasing rates of depletion of rain forests across the world. 3. With growth comes the creation of new, and expansion of, existing businesses. These produce a number of so-called external costs or negative externalities. These are the wider spill over costs imposed by firms on society and individuals. Areas of natural beauty such as the country side may be destroyed in the name of economic progress. Pollution in the atmosphere may be increased, as well as in rivers and on land as production levels increase to meet higher global demands for goods. ...read more.


If exports suffer and imports penetrate the country - then unemployment may increase in these sectors. ( Evaluation: a country will not necessarily lose its competitiveness straight away. It may take some time before the inflation differential between itself and its trading partners starts to make a difference - so we must be realistic !! ) 2. Fast economic growth, irrespective of the impact on inflation will worsen the balance of payments, as imports are increasingly purchased. 3. However, if inflation does creep-up then the problem that arises is the corrective action taken by the Monetary Policy Committee ( in the UK's case ) in raising interest rates. This is the automatic trigger that follows inflationary rises, as interest rates choke off excess demand. The problem is that higher interest rates depress economic activity, and can lead to firms having to lay-off workers as sales in the economy fall. Thus, the overheating economy may trigger a harsh period of high interest rates to cool inflation in turn imposing unemployment on the economy. Edexcel AS Economics Unit 3 Economics Growth The Blackpool Sixth Form College (c) 2002 BN 13/11/02 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Retailing In India - A Government Policy Perspective

    Macroeconomic instability discourages long-term investment by making demand, prices, and interest rates difficult to forecast. Most foreign investment entered Brazil, for instance, only after the government stabilized its economy through the 1994 Real Plan. Competition is essential to diffuse the impact of foreign investment, for without competitive markets, the entry

  2. Supply side policies and its economic impact.

    The 1981-1982 recession punctured that hope. But supply-side economics made a partial comeback because the recovery from that deep recession was both rapid and prolonged. Supply-side economics and its effectiveness abroad. Supply-side economics was all the rage in the United States in 1981, the first year of the Reagan administration.

  1. GDP and Growth

    The policy is known as the monetary policy. * Fiscal policy is used for setting and changing taxes, government spending and the government's deficit and debt. (3) To what extent can economic growth be explained simply as a function of time? What other factors might contribute to the rate of UK economic growth? Give reasons for your answer.

  2. Free essay

    From an economic perspective should my council do more to recycle a greater proportion ...

    Overall, 60% less energy is used when recycled. This table shows how much energy is saved when recycling these materials rather than manufacturing these materials from raw materials. This means less greenhouse gases are given off during the production of a material by recycling. This means benefits the environment too.

  1. The costs and benefits of economic growth.

    environment and hence minimise some of the environmental externalities that are associated with economic growth or it could increase spending on public and merit goods which might provide an improvement in a country's social welfare. It is also easier to achieve a redistribution of income and wealth when the economy

  2. Scarcity and Unlimited Wants.

    Death Rate The death rate is the number of deaths per thousand of the population in a year. The death rate has fallen from 18.4 in 1900 to 11.7 in 1988. This fall has been caused by: * Improved housing, diet and sanitation.

  1. Briefly explain why initial levels of GDP might influence subsequent economic growth.

    So the higher the initial income is the closer to the technological leader and the lower will growth be. Economic growth is the engine through which increases in living standards are generated. The growth of GDP in relation to the growth of the population provides a measure of changes in a country's living standards.

  2. Victoria Junior College

    As Eric Hobsbawm noted, "For most of the 1960s the stability of the dollar, and with it of the international payment system, was no longer based on the USA's own reserves but on the willingness of European central banks...

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work