When factors of production are increased in terms of quantity and quality, there is a resultant Long-run economic growth. These factors of production are: natural resources, capital resources, labor resources and Entrepreneurship. …
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The pace at which long economic growth is realized is referred to as the long-run rate of economic growth. Natural Resources These are substances that occur naturally in nature and are beneficial for the growth of economy. Examples include timber, mineral deposit, water, air and land. A well endowed country in terms of the natural resources will realize a faster economic growth rate provided all the other factors are constant, that is, the country does not suffer any form of abnormality in issues such as the morale of the citizens, labor provision or transportation that would otherwise lead to stunted or retarded economic growth. It is easier for a country having natural resources to realize a self advancement when citizens of the country in question are trained to utilize a given natural resource. For example, a country that has mineral deposits, can easily acquire the necessary skills and machinery required for the mining process. In another perspective, a country might be having a commodity which perhaps it does not need at a given time. Another country in need of the resource can buy it and in turn, the selling country will generate some income which in turn will lead its economic growth (Mankiw, 2001). ] Labour Resources It is the partial or whole engagement of a person’s body or mind with a view of receiving some payment in return. It represents the required human capital required in the transformation of both raw and national resources into consumer commodities. It is only achievable with the availability of able bodied persons capable of working in different fields due to its flexibility. Improvement to the human capital can be done through training them to improve their skills and in the long run be in a position of handling more technical tasks even better. Entrepreneurship It is taken as a factor of production that will lead to the long-run rate of economic growth on the grounds that there can be existence of resources and still not be converted into finished goods. Entrepreneurs are needed in order to create goods and services which are of benefit to man. They assume any risk that comes in their way (Melvin & Boyes, 2012) Components of the Gross Domestic Product (GDP) measure According to Stroup and Sobel, Gross Domestic Growth refers to the total value of commodities produced and services rendered in a country within a period of one year. The final goods and services are mainly categorized into four, namely: Consumption (C) Investment (I), Net Exports (F), and Government Purchases (G).They can also be referred to as building blocks of the Gross Domestic Product and can be illustrated in the equation; C + I + F + G = GDP. Consumption This forms the largest component of the Gross Domestic Product. It consists of purchases of durable goods, non durable goods and services. Durable goods are the goods that are used for a long period of time since they do not get worn out easily. Their useful life is usually more than three years. Examples of such commodities include: washing machines, vehicles, textbooks, furniture and mobile phones (Stroup & Sobel, 2009). These goods can be resold by the owner after a given period of time. This can be as a result of reduced efficiency of the good in question or perhaps, the owner wants to raise cash to use elsewhere. The owner can also resell ones durable goods as a result of wanting to acquire a new one. Non durable goods – their useful life is very short and hence used for a short time period. Some of them are consumed immediately after purchase. Examples include: food, cosmetics, soap and petrol. Unlike durable goods, these goods are non resalable. Whereas durable goods such as a car or a business premise can be rented out, the same
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An increase in economic growth is supposed to raise the average standard of living of the people. While studying economic growth theory, it is important to differentiate between short term and long term ups and downs. Potential GDP in a nation is determined by the aggregate labor, capital and technology available and is often identified as the long term growth (Taylor, 125).
The Determinants of the Level of Interest Rates In the UK And How the Changes in Interest Rate Affect Economic Growth
Monetary policy involves alterations in the interest base rates thus influencing growth rate of aggregate demand, supply of money and ultimately the fluctuation of prices.
Since, during inspiration it slows down prior resuming to the normal beating. The fluctuations differ drastically depending on the breathing alterations per minute, which is the key exemplification of this report. Heart rate of an individual or any animal is directly comparative to the breathing.
4 In your analysis, what role do fiscal and monetary policies have to lead to higher or lower budget deficits? 5 How do budget deficits affect overall long-term economic growth and the debt that the U.S. has to contend with? 5 Restatement of the thesis 6 Conclusion 7 References 8 Introduction There is a correlation between the federal budget and economy.
Firms participating in international business must be familiar with the economic conditions of their home country and the foreign factors as well (UNCTAD, 2008, p.27). In essence, international business and the global economy need each other to thrive. Every other international business has core goal, to maximise its profits.
However, the real GDP per person in the country more than doubled between 1963 and 2003 (Parkin 425). In the rest of the world, specifically Asia, the growth in real GDP was even greater.
Specifically, a look at the world's seven biggest economies (United States, Japan, Canada, France, Germany, Italy and United Kingdom) shows that real GDP per person has grown steadily from 1963 to 2003.
For this purpose, a range of data was utilised from books, journal articles and the Internet resources. The paper presents an insightful study on the impact of various factors on exchange rates such as monetary policy, inflation, imports and exports, government spending, economic productivity and foreign reserve etc by utilising the research and studies conducted by different scholars [(Krueger, 1983), (Rodriguez, 1977), (Diulio, 1998), (Stockman, 1980) etc].
This essay focuses on the interrelationships of particular aspect of economic development with the long-term growth of a country. In order to understand, why some countries are able to develop and grow better than others, it is important to consider the theoretical background of development and determine the drivers of growth for different nations.
The economic growth of a country can be described as the long term increase in the ability of the country to supply better economic goods, with more choices to its people. The question now arises that how does this capacity in
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