Economic Growth. It Starts Off Essay

Pages: 4 (1091 words)  ·  Bibliography Sources: 4  ·  File: .docx  ·  Level: College Junior  ·  Topic: Economics

¶ … economic growth. It starts off with discussing how growth typically manifests itself in the short and long-run scenarios that come up. Changes in capacity are obvious in the long run but changes in the USE of capacity are more prevalent in the short run. In other words, how capacity is utilized and changes within the production possibilities curve is a short-run concern whereas the overall ability to make products overall would change more in the long-run.

In other words, Apple could change from 500 iPods and 500 MacBooks per run to 400 and 600, respectively. However, in the future, they could make 1000 of each with no problem but they wouldn't be able to do that in the first example. The book also talks about aggregate supply using that prism.

The book then talks about the difference between real and nominal GDP because they are not the same thing. Nominal GDP refers to the current dollar value of output while real GDP looks at quantity. That difference is real. For example, if 100 iPods cost $30,000 right now (300 a pop), the could cost $40,000 in 10 years. The quantity (real GDP) has not changed but the actual dollar value of those same number of iPods has gone up.

The book then talks about growth indexes as a means to measure living standards or other measures. GDP per capita is cited as a common living standard measurement prism. GDP per worker is also important because it shows how productive the actual workforce is because per capita looks at growth per person across the ENTIRE population including the people who don't or can't work.

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The book points to growth in productivity coming from labor quality, management, capital investment, and research and development. In other words, Apple could benefit from smarter people coming to work for them, better managers doing the same, investment from stock purchases and such from outside sources as well as people researching how to make better products and how to make them more efficiently.

Essay on Economic Growth. It Starts Off With Discussing Assignment

The government can also improve economic conditions by altering immigration policy, giving businesses incentive to invest, incentive to save, and offering financing options that would not normally be available and/or in the amounts that are normally there. For example, businesses may get a tax credit on new hires like the HIRE Act in 2010 or they may be allowed to bring in more H-1B Visa workers to cover positions that domestic employees can't or won't fill.

Deregulation and simplification of policies and regulations can also be a boon to businesses at times if done properly. However, some say doing this to excess allows or even encourages bad behavior. One example of this is the financial industry which has been regulated, deregulated and re-regulated in many ways. There was a great loosening in the 1980's but there was also the Savings and Loan scandal. The housing crash that occurred in 2007-2009 and is still recovering is another example.

The book also makes mention of whether fast growth all the time is even a good thing, which seems odd to some. However, the massive cycles the economy has taken at times, including the Great Depression, the Great Recession, the 1970's Carter recession that didn't clear up until the early… [END OF PREVIEW] . . . READ MORE

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