Indholdsfortegnelse
Assignment 1 – Economic growth
- Economic Growth
- Denmark’s Business Cycle
- The Danish Economy, Autumn 2020
Optimer dit sprog - Læs vores guide og scor topkarakter
Uddrag
Economic growth is one of the macroeconomic objectives and is defined as a steady and increasing of national output, which means that it is the total output of goods and services produced within a country.
Goods and services can be e.g. a computer or getting a haircut, the difference between the two is that a good is a physical product you can hold in your hand
and a service is something you receives from someone and it’s not physical. Economic growth consists of consumption
investment, government spending and net export, and the more these components rises, the more economic growth does a country have.
Consumption is the total spending on domestics goods and service by consumers, and it is increasing when interest rates also known as the cost of browning money are low
and people are therefore more likely to spend more, because it is cheap to browning money. Consumption can also increase from a change in house prices and the value of stocks and shares
with people houses are going up in value and shares and stocks being more worth, therefore they feel again that they can spend more money.
Changes in consumer confidence will also affect consumption and make increase, because if people in a country are feeling secure and optimistic about the economic further and feels more secure when taking a loan or using some of their savings to buy goods and services.
Income also plays a role in consumption, and when the income increases by e.g. a raise or promotion, people have more money, and will spend it, and make consumption go up.
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Income, output and expenditure is ways of measuring the GDP and economic growth. Income method is by definition measures the national income from the side payments made to the primary factors of production
and the definition for output is in the output method only the final value of goods and services included.
The expenditure is being used to calculate the GDP for a country, and the equation the expenditure method use is GDP=consumption + investment + government spending + (export – import).
Export minus import is also called net export. The income is the final income in a country, and these includes wages, salaries, supplementary income labour.
And is minus the indirect taxes, so it is in factor prices. The output is more or less is the output the gross value added (GVA), and the output focusses on finding the total output of a nation.
Because the complication of the multiple stages in the production of goods and services, and only the final value of the goods and services is included.
And this avoids the issue of double counting, where the total value of a good is included serval times in national output, by counting it in several stages of production.
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