Free Four Factors of Economic Growth Essay Sample

Economic growth refers to a long-standing extension of the prolific prospective of the financial system of a firm or a country. Improved living standards and increase in employment should be among the benefits of a well-put economic growth. Major factors based on supply, demand and efficiency, are the main determinants of an elaborate financial system.

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Supply factor

For economic growth to be evident, there are four characteristics that are usually required to be exhibited. These characters will always lead the economy to grow and expansion. They include the increase in the quantity and quality of the available natural resources, human resources, better supply of capital goods, improvements in the areas of technology and its advances related to the improvements seen in the information sectors.

Demand factor

The demand factor relies on the idea of getting potential on the production of supplies as a whole. This includes sectors of households and even businesses. For the economy to grow, there ought to be an increase in the total spending to get the gains that are produced as a result.

Efficiency factor

This is the use of the available resources with lesser costs associated with them. In efficiency factor there is allocate efficiency, which puts both goods and services together to increase people’s betterment.

Productive efficiency factor

This relates to the economic wellbeing and employment of all people. These factors are related with the use of resources that are available in a very low-cost manner. Graphs:

CurveAB is a production potential curve; X is called a long-run supply curve. There is growth of production, which is illustrated by the shifts that come from AB to CD. This is also true for the shift from X to Y.

The main shifts that are seen in both the long run and short run aggregate curves, that is from AS1 and AS'1 to AS2 and AS'2 are seen that way because there is a big change and improvement in technology as a whole. The economic growth for any particular year may change. This will happen if curves shift from AS1 and AS'1 to AS2 and AS'2. This will also happen if the curve also shifts rightward from AD1 to AD2. This will happen in a percentage of 5 and 8 respectively.

In conclusion, economic growth is wholly influenced by supply, demand and efficiency, in which goods and services move within the market. Strong financial system indeed forms the core of economic growth and sustainability.


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