The Benefits of Economic Growth

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    The Benefits of Economic Growth

    • The main benefit of economic growth is that their is likely to be an increase in people’s living standards
      • If real GDP per head rises, the population is likely to enjoy more goods and services.
    • Economy growth allows poverty to be reduced without having to redistribute existing income
      • This is because as output’s increased, the government will earn more money through taxation, which can be used to help the poor.
    • Economic growth can increase employment
      • However, if AD does not rise in line with production, higher output can be accompanied by higher unemployment, as a firm will be able to produce more output with fewer workers.
    • Economic growth also raises a country’s status and power in international relations.

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