Describe The Benefits Of Economic Growth

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Economic growth means an increase in real GDP. This increase in real GDP means there is an increase in the value of national output / national expenditure. The benefits of economic growth include: Higher average incomes. This enables consumers to enjoy more goods and services and enjoy better standards of living. Lower unemployment With higher output and positive economic growth firms tend to employ more workers creating more employment UK unemployment rises during a recession – falls during periods of economic growth. Lower government borrowing. Economic growth creates higher tax revenues and there is less need to spend money on benefits such as unemployment benefit. Therefore economic growth helps to reduce government borrowing. Economic growth also plays a role in reducing debt to GDP ratios. Improved public services. With increased tax revenues the government can spend more on public services, such as the NHS and education e.t.c. Money can be spent on protecting the environment. With higher real GDP a society can devote more resources to promoting recycling and the use of renewable resources Investment. Economic growth encourages investment and therefore encourages a virtuous cycle of economic growth. Economic policies Many government departments that form the pivot of an economic cluster, which was set…show more content…
To put it into context if the rand depreciates against the dollar, it means that it is more expensive to trade. The supplier will pay more for goods meaning that they get less goods at a higher price. This ultimately impacts on the man on the street because it means that they are buying goods that they normally buy at a higher price which then impacts on spending. The downside to this is if there is less people spending money, then there is no flow money in the economy which results in slowed economic
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