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Government Objectives and Economic Growth

Question

Explain why governments aim for economic growth.

Category:

Macroeconomic Factors and Policies

Frequently asked question

Preview Answer

I. 🍃Introduction
- Brief overview of the topic

II. Input
- Higher living standards/higher incomes
- Higher employment
- Less government spending on benefits
- More tax revenue - allowing more spending on e.g. health
- More exports
- Reduced poverty
- To attract investment from abroad/MNCs

III. Explanation ➡️1: Higher living standards as people can enjoy more goods and services
- Explanation of how higher living standards can lead to more consumption
- Examples of goods and services that people can enjoy

IV. Explanation ➡️2: More workers will be needed to produce the higher output
- Explanation of how higher output requires more workers
- Examples of industries that may require more workers

V. Explanation ➡️3: Government may be able to spend more on e.g. education and healthcare
- Explanation of how more tax revenue can lead to more government spending
- Examples of areas where government spending can be increased

VI. Explanation ➡️4: Fewer unemployed workers will reduce the burden on government expenditure
- Explanation of how lower unemployment can lead to lower government spending
- Examples of government benefits that may be reduced

VII. Explanation ➡️5: Current account position will improve if there is the demand for exports
- Explanation of how more exports can lead to a better current account position
- Examples of countries that have benefited from exports

VIII. Explanation ➡️6: Incomes will rise which may allow more people to enjoy basic necessities
- Explanation of how higher incomes can lead to better living standards
- Examples of basic necessities that people may be able to afford

IX. Explanation ➡️7: Growth means foreign firms have the potential to earn high revenues/make high profits
- Explanation of how growth can attract foreign investment
- Examples of industries that may attract foreign investment

X. 👉Conclusion
- Summary of the main points
- Implications of economic growth

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