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.