Economic Growth As A Measure Of Economics Growth Essay

Economic Growth As A Measure Of Economics Growth Essay

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Economic growth is defined as an increase in the output that an economy produces over a period of time, the minimum being two consecutive quarters. It is an increase in what an economy can produce if it is using all its scarce resources and at its full potential. An increase in an economy’s productive potential can be shown by an outward shift in the economy’s production possibility frontier (PPF).
It is conventionally measured as the percent rate of increase in real gross domestic product (GDP) . GDP is the market value of all the final goods and services produced within in a country in a given time period. Aggregate expenditure: consumer spending (C) plus investment by firms (I) plus government spending (G) plus net exports (X-M) equals GDP. This is the basis for measuring GDP.

Faults with GDP as a measure of economics growth are:
1. GDP does not take into account the sustainability of future GDP.
2. GDP does not take into account the value of non-monetized activity.
3. GDP does not differentiate between more or less productive economic activities. (i.e. implicitly assumes that economic activity is the desirable ends rather than a means to an end)”

The Gini index can be compared to GDP figures. The Gini coefficient is normally defined based on the Lorenz curve, which plots the proportion of the total income of the population that is cumulatively earned by the bottom x% of the population. If GDP grows, some take this to mean that the people in a country are doing better. If the Gini index is rising as well, it indicate that the majority of the population may not be experiencing increased income. Because of income inequality, governments will sometimes redistribute wealth through social programs and taxation policies.


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...oks likely that inflation will drop and remain below one percent for a whole year. The Reserve Bank is more likely to tighten macro-prudential policy than loosen it over the year ahead. The report upgraded GDP forecast for 2015, to 3.4%. The New Zealand dollar may fall further against the US dollar, but will remain strong against other currencies including the Australian dollar.

Professor Paul Collier has argued, “ Economic growth is not a cure-all; but the absence of growth is a kill-all”. Economic growth can cause a few problems. Economic growth is an increase in Real GDP. It means the national output is increasing. Higher incomes could be a key factor in enabling people in developing economies to better off. Without a growth in real GDP, there are always going to be limitations to economic development. [this could be a starting statement and then the rest of the

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