What steps can a nation take to achieve economic growth invest in physical capital?
- invest in physical capital.
- engage in international trade.
- focus on increasing imports.
- invest in human capital.
- reduce the defense budget.
How can a nation’s government invest in human capital?
A way through which a government can invest in human capital is by providing good medical care so that they can stay healthy, take less days off work due to sickness and help the country be more productive. Another way to help the workforce out is by make education free.
How does capital contribute to economic growth?
Increased consumer spending, increased international trade, and businesses that increase their investment in capital spending can all impact the level of production of goods and services in an economy. For example, as consumers buy more homes, home construction and contractors see increases in revenue.
How does rapid population growth create an obstacle to economic growth in developing countries?
Rapid population growth creates serious problems for poor countries in which the rate of capital formation is low. This scarce capital simply goes into spreading a larger quantity of tools over a larger number of people without raising per capita productivity.
What is the impact of population growth on economic development?
As population increases, per capita available income declines. People are re- quired to feed more children with the same income. It means more expenditure on consumption and a further fall in already low savings and consequently in the level of investment.
What are the factors that contribute to the economy?
There are three main factors that drive economic growth:
- Accumulation of capital stock.
- Increases in labor inputs, such as workers or hours worked.
- Technological advancement.
Why is stagflation dangerous?
But here’s the difference between a recession and stagflation: The prolonged period of slow economic growth is coupled with high rates of inflation. If the rate of inflation begins to rise past 5 or even 10 percent, things can get hairy. This is why stagflation is so dangerous.
What is the consequence of stagflation?
With stagflation, a country’s citizens are affected by high rates of inflation and unemployment. High unemployment rates further contribute to the slowdown of a country’s economy, causing the economic growth rate to fluctuate no more than a single percentage point above or below zero.