REASONS FOR ECONOMIC

GROWTH
Submitted to: Submitted by:
Dr. Subhredndu Bhattacharya Maneet Kaur:80303160060
Shubheksh
Agnihotri:80303160007
Aabhash Sharma:80303160108
Mohak Agrawal:80303160004
Akshay Srivastava:
80303160130
What is Economic Growth?
Absolute Real Economic Growth is an
increase in Real GDP from one period to
the next.
Per Capita Real Economic Growth is an
increase from one period to the next in
per capita Real GDP, which is Real GDP
divided by population
What Causes Economic
Growth?
Capital: To produce more capital goods, which are not directly
consumable, present consumption must be reduced. As the
saving rate increases, capital formation increases, and so does
economic growth.
Technological Advances: Technological advances usually come
as a result of companies and a country investing in research and
development (R & D).
Natural Resources: Countries rich in natural resources are not
guaranteed economic growth and countries poor in natural
resources may grow. It is still more likely for a country with
natural resources to grow.
Labor: It is possible to produce more output, but whether or not
the average productivity of labor rises, falls or stays constant
depends on how productive the additional workers are relative to
existing workers. One way to achieve increased productivity is
through education, training, and experience
 Consequences of Economic
Growth
Positive Impacts:-
Improved living standards
Reduction in poverty
Education.
Improved technology and infrastructure
Better health facilities.

Negative impacts of economic growth:-

Increase in Income Inequality
Health Challenges that may be caused due to industrialisation.
Greater Potential for Damage: As countries develop economically, they
tend to develop militarily too.
Higher economic growth may affect the environment adversely.
Policies For Economic
Growth
Demand Side Policies:- Demand side policies aim to increase aggregate
demand. This needs to be done during a recession or a period of below
trend growth. If there is spare capacity (negative output gap) then demand
side policies can play a role in increasing the rate of economic growth.
Monetary Policy.
Quantitative Easing
Fiscal Policy
Devaluation
Supply Side Policies:- The alternative strategy for improving economic
growth is to use supply side policies. These attempt to increase productivity
and efficiency of the economy.
Lower Income Taxes.
Flexible labour markets
Better Union relationships
Privatisation and deregulation