ECONOMIC GROWTH

Economic growth is an in
crease in the total output of
the economy. It occurs wh
en a society acquires new r
esources or when it learns
to produce more by using e
xisting resources.
 BENEFITS OF ECONOMIC GROWTH

• Economic growth raises a country’s

overall standard of living.

oThis provides people with goods and

time for enjoyable leisure activities.
 BENEFITS OF ECONOMIC GROWTH

• Economic growth enlarges the tax b

ase, or the income and properties that
may be taxed.

o A larger tax base lets government su

pply more public services and/or lower
taxes.
 BENEFITS OF ECONOMIC GROWTH

• Economic growth creates jobs and e

conomic security for more people.
 BENEFITS OF ECONOMIC GROWTH

• Economic growth can benefit the ec

onomies of other countries through in
creased trade.

o A successful growing economy can

be a role model for developing nations.
FACTORS OF ECONOMIC GROWTH
Economic growth depends on the nature
of the factors of production and how well
they are used.

Factors of Economic Growth include:

o natural resources
o human capital
o capital goods
o entrepreneurship
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 FACTORS OF ECONOMIC GROWTH

Natural resources are the raw materials a co

untry has that make life and production of goo
ds possible.

Natural resources affect economic develop

ment.

Nations rich in natural resources will use the

m to produce revenue.
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 FACTORS OF ECONOMIC GROWTH

How valued a nation’s natural resources are

determines how much revenue they produce a
nd how much foreign investment they attract.

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 FACTORS OF ECONOMIC GROWTH
Human capital refers to investments in the wel
fare and training of workers.

An increase in human capital enables an econ

omy to produce more of everything that uses h
uman capital.

Providing health care, family benefits, and more

training and education are all investments in hu
man capital.
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 FACTORS OF ECONOMIC GROWTH
An increase in human capital enables an econ
omy to produce more of everything that uses hu
man capital.
The more skills and education workers have, th
e better they are able to work with mistakes and
to learn new jobs as technology changes.

More developed nations often invest more in hu

man capital than less-developed nations.

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FACTORS OF ECONOMIC GROWTH
Capital goods are goods used to produce th
ings. The ability to invest in capital goods infl
uences a country’s economic growth.

An increase in capital goods enables an ec

onomy to produce more of everything that us
es these capital goods.

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FACTORS OF ECONOMIC GROWTH

For example, an increase in capital goods c

an result in more factories, office buildings, tr
actors, or high-tech medical equipment .

Producing more goods for sale in a quicker a

nd more efficient way leads to economic gro
wth and greater profit.

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FACTORS OF ECONOMIC GROWTH

Entrepreneurs are creative, original thinkers

who are willing to take risks to create new bu
sinesses and products.

Entrepreneurs think of new ways to combin

e natural, human, and capital resources to pr
oduce goods and services that they expect t
o sell for a price high enough to cover produc
tion costs.
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 FACTORS OF ECONOMIC GROWTH
Entrepreneurs risk their money to produce ne
w goods and services in the hope of making a
profit.

If a new product or service does not become p

opular, the entrepreneur may not make a prof
it. This is the risk he or she takes.

Economic growth depends on entrepreneurs

willing to take chances and introduce new ide
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