Negative Economic Growth

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The term economic growth, meaning an increase in the production of goods and services over a period (normally linked with population), at a superficial level seems unequivocally good: what negatives could there even be? This simplification will be considered in this essay whilst also considering the definite negatives of economic growth. I will also end with a statement about the best source of economic growth for the general population – in my eyes the ones who matter most. One of the most directly potent benefits of economic growth is an increase in the standard of living within the population. This growth is demonstrated in the AD/AS graph above. Having a higher GDP output from Y1 to Y2 means that we had a higher AD (a shift out to the right). As the UK has a high AD proportion in consumption this reduces unemployment as labour is derived. This leads to higher incomes (and thus a wage spiral occurs), so people tend to spend more, leading to a better standard of living. The wage spiral occurs as we are getting closer to the maximum employment so people tend to want a higher wage as the competition has reduced. Of course, we can also see that this causes inflationary pressures from GPL1 to GPL2 but this is not necessarily a bad thing as it can be controlled but also because of the higher wages people can afford it. So a higher GDP seems to lead to a higher standard of living. However, we have missed off a vital part of this analysis of a benefit – who it affects. We have

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