3.0 Consequences of income inequality The consequences bring by the income inequality is still a contradictory arguments on whether it is good or bad for the economic growth. In positive view, income inequality stimulatesthe aggregate economic growth. In negative view, income inequality slows down the aggregate economic growth (Andriuskevicius, Ciegis&Dilius, 2017). 3.1 Positive impacts on economic growth Income inequality reflects the rich become richer and the poor become poorer. The rich may choose to spend,give away, invest or save their money.
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
Participants were asked to rate their happiness, and were then given 5$ or 20$ to spend on either themselves or on someone else and after the spending experience asked to rate their happiness again. The results showed that only the subjects in the pro-social spending condition experienced an increase in happiness. All three studies indicate that pro-social spending does indeed have an effect on happiness. But when the researchers asked college
The model assumes that exogenous economic growth is continuous over time. In other words, the capital stock of the country accumulates over time as the population continues to save. This is because labor input also increases correspondingly with the technological progress. As the government and the population’s income increases as a result of their increased output resulting from increased use of technology, their savings also increases as they set a faction of the income for savings. That is, the gross domestic product increases as a result of an increase in per capita income as the country experiences a technological progress which increases its productive efficiency.
• These all factors are affected by high inequality. • High inequality also reduces people accessibility towards resources even it threatens the political condition of the economy, discourages the behavior of people towards individuals or enterprises and this become the hinder towards economic growth. • If we talk about countries which have high growth but low living standard then I will prefer countries like India and China in both the countries there growth rate is rising but there standard of living is not that much high. • GNP is the value of product and services by a labor and property which is supplied by the people of that country and it is calculated in one year but it is not considered the way on which the wealth is distributed .in case of underdeveloped countries only one percent of the population is maybe controlling 80 percent wealth. • Economy may be expand and by this GNP increase at high rate but the people may not experience any of the change or rise in their living
That consumer confidence translated into increased consumption and increased aggregate demand. In contrast, a decrease in consumption would accompany diminished consumer expectations and a decrease in consumer confidence, as happened after the stock market crash of 1929. The same problem has plagued the economies of most Western nations in 2008 as declining consumer confidence has tended to reduce consumption. A survey by the Conference Board in September of 2008 showed that just 13.5% of consumers surveyed expected economic conditions in the United States to improve in the next six months. Similarly pessimistic views prevailed in the previous two months.
• If we talk about countries which have high growth but low living standard then I will prefer countries like India and China in both the countries there growth rate is rising but there standard of living is not that much high. • GNP is the value of product and services by a labor and property which is supplied by the people of that country and it is calculated in one year but it is not considered the way on which the wealth is distributed .in case of underdeveloped countries only one percent of the population is maybe controlling 80 percent
With a higher level of national output with a given population, GDP per capita will be generally higher meaning consumption possibilities are higher. The main benefits are likely to be higher living standards as consumption possibilities expand, greater tax revenue for the
LITERATURE REVIEW 1. Gevit Duca points out in his paper “THE RELATIONSHIP BETWEEN THE STOCK MARKET AND THE ECONOMY: EXPERIENCE FROM INTERNATIONAL FINANCIAL MARKETS” that stock prices and GDP in developed market economies shows that these two variables tend to move in the same direction over time. He focused on long-term trends and the evidence he presented is garnered from five of the top ten stock markets of the world in terms of market capitalization. 2. Annika Alexius and Daniel Spång in their paper “Stock prices and GDP in the long run” have tried to show that stock prices are dependent on output (domestic and foreign) in the G7 countries, which according to them is a more viable relationship than that between consumption and dividends.