Economics Today (19th Edition)
Economics Today (19th Edition)
19th Edition
ISBN: 9780134478777
Author: Roger LeRoy Miller
Publisher: PEARSON
Question
Book Icon
Chapter 9, Problem 9.1LO
To determine

What is economic growth and the importance of economic growth rates.

Expert Solution & Answer
Check Mark

Explanation of Solution

Economic growth rate refers to the rate at which the output of an economy increases overtime. It is used as an indicator of economic well-being of a nation. Economic growth is used as the most powerful instrument for reducing poverty and improving the standard of living of the residents of a country.

Thus, economic growth rates are important for the following reasons,

a. Helps in reducing poverty - Economic growth imply growth in income in an economy. As income in a country increases it leads to a reduction in poverty in the country. Further, it is ambiguous whether this increase in income will lead to an increase in income inequality or a reduction in it. If rise in income is evenly distributed among different sections then growth will lead to a reduction in inequality and vice versa.

b. Generation of employment - Economic growth generates new job opportunities. The increase in jobs leads to a rise in demand for labor which in turn leads to a rise in wages and salaries of working classes.

c. Improvement in living standards - Economic growth leads to vicious circle of prosperity and opportunity. Economic growth in one period will increase output and income in the other period which will in turn induce firms to expand and increase output further. In addition to this, increased income due to economic growth will induce families to invest in education and improve their skills. This will lead to a further development in availability of skilled labor in future.

Economics Concept Introduction

Introduction:

Economic growth rate refers to the rate at which the output of an economy increases overtime. It is used as an indicator of economic well-being of a nation.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Assume that an economy has an inflationary gap. Compare the use of fiscal policy with the use of monetary policy to remove the gap. Assume a closed economy. Use graphs to illustrate.
Suppose Person A is looking for a health insurance plan on Oregon's health insurance marketplace and they find one with the following details: Monthly Premium: $331 Deductible: $5,000 Primary care visit to treat injury or illness: $35 copay Imaging (CT/PET Scans MRIs): 40% coinsurance after deductible Ambulance: 40% coinsurance after deductible Inpatient hospital stay: 40% coinsurance after deductible Suppose further that Person A purchases this plan and it takes effect in January 2022. The cost Person A pays per month for this health insurance is equal to _. Person A must pay. before coinsurance kicks in. 0000 $35; $5,000 $35; $331 $331; $5,000 $331; $35 Multiple Choice 1 point Suppose Person A is looking for a health insurance plan on Oregon's health insurance marketplace and you find one with the following details: Monthly Premium: $331 Deductible: $5,000 Primary care visit to treat injury or illness: $35 copay Imaging (CT/PET Scans MRIs): 40% coinsurance after deductible Ambulance:…
Use the figure below to answer the following question. Point X and Y represent two non-ideal contracts that the individual is faced with buying. From this information, you can conclude that if given the option between points B and Y the individual would prefer: Utility A у в 0000 UKI) E[Bp IH point B- the actuarially fair and full contract point Y-the actuarially unfair but full contract point Y- the actuarially fair, but partial contract point B- the actuarially fair, but partial contract income
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:9780190931919
Author:NEWNAN
Publisher:Oxford University Press
Text book image
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Text book image
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Text book image
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Text book image
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education