The Pros And Cons Of Economic Growth

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Economic growth is the increase in the capacity of the economy to produce goods and services, making the production possibility curve of an economy shift outward (Fig 1.1). When an economy is growing, it is likely to display a rise in national income, mainly real GDP and or GDP per capita. When comparing these figures between countries with different currencies, it is useful to use the Geary-Khamis 1990 US dollar as this adjusts the purchasing power parity. Though these figures are easy to understand, calculating national income statistics is a long and tedious process and often come up with inaccurate and sometimes wrong results. At most, these numbers are a close estimate.
Economic growth can be caused both by endogenous factors such as increased productivity and exogenous factors such as technological progress. These factors help grow the economy in two ways, in the short run and the long run. Usually, in the span of a few years, the economy will fluctuate with a bullish and bearish trend but will overall have an upward or downward trend. This is popularly known as the business cycle model (Fig 1.2).

High GDP figures aren’t all that. Economic growth is a good sign, but for an economy to thrive, it needs to develop as well. Economic development is the qualitative measure of the economy. This pays more attention to the qualitative side of things. The welfare of the economy is crucial for any economy to move forward. Factors such as happiness, availability of goods,
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