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Economic Growth And Growth Essay

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Inflation, what does it mean? It is simply the rate at which the price of goods and services rises and thus leads to falling in purchasing power. It also means the rise in price as compared to a pre-defined benchmark. It can also mean an increase in supply of money in the market. Growth in economics refers to economic growth of a country and it means an increase in the market value of services and goods produced by a country over a period of time. Whatever the meaning is taken, both inflation and growth are closely related and dependent on each other and a proper balance should be established.
When the money supply increases in the market then disposable income increases in the economy and demand for goods increases by customer. But due to
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It is the most fundamental indicator of a country’s economic health. It is measured by annual change in percentage of GDP. GDP (Gross Domestic Product) refers to the total income from the total output and the market value of all services and goods produced by a country. It is also the total expenditure of money as it is also a way to measure production. The main components of GDP are consumption, investment, government spending and net exports. There are various key drivers for growth of a country such as growth in physical capital stock, growth in active labor force, growth in human capital, innovations increasing productivity and institutes that help in maintain law, order, economic stability etc.
The advantages of economic growth are higher standard of living and stimulation of more jobs to provide more and more employment. There are some disadvantages too such as an increase in inflation, increase in working hours etc. Growth is maintained by the government through implementation of various fiscal policies. Government can influence productivity levels by decreasing or increasing tax levels. This is turn, decreases inflation, increases employment and maintains a healthy value of
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Investment: With the rise in inflation the price of goods and services increases. So the amount of saving decreases as they are bound to spend more in order to fulfill their basic requirement. A person will be able to invest more only if he/she has sufficient funds left after their expenditure and have very strong savings.
2. Exchange Rates: It is the value of money of a country prevailing in other countries. Due to high inflation, the exchange rate gets fluctuated which in turn affects trades (import and export), transaction across border and also value of money gets affected.
3. Unemployment: If inflation is high, the unemployment rate is low. The growth of a nation is also dependent on the rate of employment.
4. Interest Rates: When inflation is high, the value of money goes down leading to the reduction in purchasing power. Increase in inflation also causes rates to increase, so the cost of the good changes and people will have to use more money for the same services and goods.
5. Stocks: It is the representation of equity stakes of the owners. Inflation leads to changes in monetary as well as fiscal policy. So, the return of the company also
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