What affects economic growth?

economic growth is supported by government policy, productivity, capital investments and consumer expenditures. These factors allow permanent economic development, which eventually leads to expansion of the economy of the region or country. Such economic growth improves employment, income and standard of living for citizens. Components of economic growth do not exclude each other and often have a symbiotic relationship between themselves. Alternatively, these inputs for economic growth can cause the economy to expand too quickly and has negative long -term effects. The use of taxation, public debt and government expenditure to influence the trade cycle is called fiscal policy. Taxation provides income to the government. Such incomes are used to improve infrastructure; Infrastructure allows the provision of goods and services for lower costs to consumers or businesses for faster. Governments also use taxes to provide enterprises by grants or loans for expansion, research and development or hiring.

currency policiesKA is determined by changes in interest rates and allows governments to promote economic growth and capital expenditure through loans. Low interest rates reduce the cost of lending capital from banks for investment or business expansion. Consumer expenses for expensive purchases requiring long -term financing, such as houses or vehicles, increase for the same reason. As a result, the industries are expanding to increase capital investments or consumer demand.

The expansion of businesses or companies operating in industries where consumer demand is high must improve productivity to maintain economic growth. Companies must have access to an educated and qualified job offer. This leads to higher performance due to mass production and increasing income for the population. Technological improvements caused by capital investments also allow the company toEM providing more efficiently goods and services at reduced costs, which in turn increases their production.

Capital investments allow companies to increase the size of the workforce. Reduced unemployment increases the overall prosperity of the area, which in turn increases consumer demand. Businesses respond to this demand by investing capital investments in technology or equipment for faster production. Finally, such effective production allows the company to export such goods to foreign markets and provide greater economic growth.

economic growth is associated with danger. If consumer demand caused by a higher labor force or the attraction of loans due to lower interest rates exceeds the offer, prices for such goods and services will rise to a level that causes inflation. As a result, consumer requirements for such overpriced goods will be reduced and businesses to accept financial losses or employees are allowed. Falling prices in combination withIncreasing unemployment causes slowing or stopping economic growth. This leads to a recession.