INTRODUCTION Economic growth is defined as the increased capacity of an economy to be able to produce goods and services in comparison from one period of time to another. This is figured by the genuine Gross Domestic Product (GDP) and development, and is measured by utilizing genuine terms such as “Balanced Inflation”. These terms help to remove any distorted views on the perceived outcome of inflation on the cost of merchandises produced. Likewise, Economic growth is related to the high expectations in a person’s standard of living. If the standards are high, it wouldn’t be beneficial for the economy as the working class individuals will face a lot of trouble.
Having a wide gap between the upper and lower class doesn’t benefit the economy instead has a negative impact on it. For example, according to the Washington Post, “As income inequality grows, more and more resources are concentrated in the hands of the wealthiest. So, the idea goes, the wealthiest are better able to steer policies in directions that protect inequality at the expense of growth”. Because most of the wealth is in the hands of individuals who are at the top they have the power to do things their way. On the other hand, consumer spending plays a role in the economic growth of a country.
This caused a decrease in inequality pay but not for income. This simply meant the rich kept getting rich while the poor stayed poor (Hodgson 100-101). In addition, with technology advancement the need for experienced professionals increased. The type
Argument against protectionist measures In the United States, it is not free trade that has led to the decline in wages as result of less demand for low skilled workers it is the capital investments in labor-saving technologies like robotics and increasing worker productivity that have led to the large majority of the factory job losses (American Institute of Enterprise 2017). Manufacturing is growing and the sector continues to remain a large and important part of the U.S. economy, employment in the manufacturing sector has deteriorated for some time primarily due to growth in productivity in manufacturing production process (ibid). Although trade is one of the factors that has contributed to change in the manufacturing sector in terms of
Firstly, globalization only serves the interests of developed countries like the US, European countries, China, Singapore more than developing countries such as Vietnam, Thailand, Africa (Is globalisation, n.d.). According to Lianna Amirkhayan (n.d.), the uneven distribution makes a big difference in income between developed and developing countries. The rich countries still maintain their wealth which even double rich, compared to developing countries. Secondly, globalization creates a moving wave among people in developing countries. They move to other countries to find a better chance to work.
Why I think income inequality is increasing in the United States? In my Opinion, the reason of income inequality is increasing in the United States is Growing Market. The globalized markets in the US are break downs the boundary of smaller, local market and provides new platforms and new audience to trades. The US government allowed artisan, farmer, and manufacturer to open their products and services to the global economic. This meaning that the purveyors do not have to rely on small, local market makes a living and it mean that others around a global can have access for their goods.
In the medium to long run, this productivity increase drove wage growth. He also admitted the difficulty of identifying the productivity effect of immigration and that is probably the reason why it has largely been neglected. Peri (2012a) examined immigration’s impact on the TFP in the United States at the state level. Peri found that immigrants promote specialization and therefore increase total factor productivity. This impact, however, was offset by immigration’s negative impact on the skill-bias of production technologies, leading to a slightly negative effect on average workers’
With higher production costs and productivity at it maximum, companies cannot maintain profits by producing the same amounts of goods and services. As a consequence, the increased costs are passed on to customers, causing a rise in the overall price level (inflation). Demand-pull inflation occurs when there is an increase in collective demand, categorized by the four sections of the macro economy: governments, households, businesses and foreign buyers. When these four sectors at the same time want to purchase more output than suppliers can produce, buyers compete to acquire limited amounts of goods and services. Buyers then bid prices up, again and again, causing inflation.
Nowadays, in the light of the development in technology, especially in transportation and media, trade and communication has increased rapidly among countries. This trend is called globalization. Generally speaking, globalization has its own advantages and disadvantages. The development in international trade and communication has created employment and opportunities for millions of people, but it has also made poor countries poorer. In my opinion, globalization has both positive and negative aspects.
Cost-push inflation happens when we face higher prices due to the increase in cost of production and higher costs of raw materials. It is determined by supply side factors. Cost-push inflation can be caused by higher price of commodities, imported inflation, higher wages, higher taxes and higher food prices (Economics Help, 2011). Demand-pull inflation happens when there is an increase in the price of goods and services when demand increases too much that it outpaces supply (US Economy, 2015). Sometimes people refer it as “too much money chasing too few goods”.
If interest rates increase, it will become attractive to invest money in that country because investors will get a higher return from savings in that country’s banks. Therefore the currency demand will rise. But higher interest rates will have a negative impact on the country. This is due to the reduction in purchasing power of the consumer while the loan borrowers have to pay more interest. Foreign investors are attracted towards a country that has a strong economy.