English Assignment

Introduction

Economic growth can be defined as “long-term expansion of the productive potential of the economy”. It can be measured in two ways; either by the increase in real GDP (Gross Domestic Product) happened over a certain time or the increase in real GDP per capita that happened over a certain time.

When it is measured by the increase in real GDP happened over a certain time, it means that the economic growth is calculated as the annual percentage of growth change in GDP. For example, if the real GDP in the United States for 2009 is 10,000billion and 10,100billion in 2010, the rate of economic growth in the United States is 1%.

However, when it is measured by the increase in real GDP per capita that happened over a certain time, it means that the economic growth is calculated considering the size of the population. The real GDP per capita is compute by dividing the real GDP with the size of the population. For example, if the real GDP in United States for year 2009 is 10,000billion and the population is 299million; the year real U.S GDP per capita is $33,445. In year 2010, the real GDP increased to 33,500billion. Therefore, the rate of growth of GDP per capita for year 2009 is 0.16%.

To improve the standard of living of the nation, the economic growth plays an important role.

Factors that affect the rate of economic growth

Technology Advance – The improvement in technology will influence the economic growth. This is because the productivity of growth is strongly related to the technology advance. With the improvement of technology, the resources are combined in improved ways. Hence, the output available is going to increase. Also, technology advance is crucial because it helps to cut down on the real costs of supplying goods and services. Investment and technology advance are closely related because technology progress needs investment in doing research and development.

Productivity of labor – If the...