To
discuss the concept of economic growth, it is essential to measure economic
output and then examine how that output has changed over a period of time. Economic growth refers to the increase in the amount of goods and services the
whole economy can produce over and above what they produced in the last
year. [Detailed explanation is given
with - National Income]
Economic
activity is a continuous and consists of a series of flows. Production of
goods and services can be seen as a flow of output in one direction and in the
opposite direction the spending on goods and services. A real world
economy is not a closed system. Incomes are withdrawn from injected into
the system. It does not consist solely of households and firms (saves and
investing), it also have government sector (taxation and public spending) and
foreign trade sector (import and export).
Circular flow of income is shown as follows;
Components
of Injection are Investment, government spending and
exports . Injection causes an inflow of income into the economy.
Components
of leakage are
savings, taxation and imports. Leakages
causes an outflow of income from the country.
Economic growth is closely related
with the standard of living of the people of the country.
The distribution of income is an
important factor regarding standard of living.
The types of products produced and
the availability of choices.
The working conditions available to
the workers.
Changes in the duration of working hours.
The Income, its saving potential and
the way that people spend their income.
Size of the sectors of production and
it’s the prominence.
The method of handling of negative externalities
such as pollution, congestion, environmental problems, etc.
These factors are the indicators to
show the economic growth of a country.
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