Economic Growth and Standards of Living?
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- Tehniat Zafar
Q: Is it possible for an economy to experience economic growth as measured by GNP without rise in standard of living. Discuss.
Ans: A Nation’s “GNP” Gross National product is the total amount of its economic production and resources. On the other hand,
- The Gross National Product amount in no way specifies the method in which this wealth or money is circulated in the economy.
- There are many cases in “under-developed” states like 1% of the inhabitants may or would control 80 % of the wealth as there is a large income disparity and unequal distribution of wealth. Therefore, however the economy may develop and the amount of GNP will escalate significantly.
- It is not necessary that the largest ratio of the people may experience an appropriate increase in their standard of living because population rate is so high in these nations.
- Population growth is one major problem. Nevertheless, total national income might significantly rise because there will be more workforce.
- The average per capita GNP will decrease if population growth is tremendously great because there is a large amount of income disparity among people.
- GNP measures the economic condition of the country that how the economy is towards growth. Acording to an assumption: All other things equal, A rise in GNP will read to an increase in the standard of living people aswell. Vice versa that if a nation increase its standard of living their GNP rate will increase aswell.
- One benefit public can benfit from higher growth rate is that the will be consuming more goods and services and it is also an economic assumption that consumption is related to utility and higher consumption in terms of theory there is greater level of prosperity.
- Higher growth rates results in higher tax revenues and when the tax revenues will increase the government can spend more on siginificant services like health, roads, education.
- It is a known fact that improved health can also lead to improved standard of living and better educational standards can promote literacy and development as education is a significant tool of welfare and prosperity.
- If a country’s growth rates are high the unemployment rate will also decrease as there will be more jobs. As employment is a major reason of social problems and issues but structural unemployment like due to technological changes will not decrease.
- Law of Diminishing returns is an economic theory, which means that the tenth unit of a good will give much less satisfaction than the first one. For example if we already have two luxury cars, will our living standards actually recover if we now have the ability to own three cars now? Frequently as economic growth expands earnings, people progressively save their wealth as this is basically because they fight to find whatever expressive to devote their wealth on and which is suitable for them
- Economic growth can also increase pollution. Global warming side effects are becoming a significant problem for the society. On contrary to it high economic growth can be used develop better techniques to lessen the effects of pollution and pollution itself.
- As there is a large amount of income disparity and unequal distribution of wealth high economic growth can cause more increased inequality because educated people will get more benefit and illiterate people will not get as much benefits as compared to educated people.
- Higher economic growth results in higher incomes and wages of people and because of that the crime rate increases aswell because crime is not basically related to poverty it is mostly related to theft, as you can see in the late 50’s or 60’s technological gadgets like mobiles phones and tablets were non existent and in today’s world these gadgets are the ones which mostly get stolen and these thefts are higher now.
- Higher growth rate will affect standard of living as the people will start to work more hours thus disturbing their personal life. They will get higher incomes but they wont be having enough time to spend it with their family with peace.
- As the economic growth will increase many diseases will increase aswell as you saw that in today’s standard of living obesity is a common disease as people have money and increased prosperity they avoid doing work themselves or even to cook food for their self so they just go out buy all tha fast junk food which later result in many new diseases in them.
- It’s a proven fact that when an economy’s growth rate rises the income increases aswell money is more available to people through employment oppurtunities when the economy is powerful people spend more money and consume more products.
- As a country develops, income arises, population growth shifts, expectation for a better life gets high, people’s demands arise. Economic rapidness affects the consumer behavior and in every dynamic economy consumer and consumption patterns change rapidly
- High standards of living is directly related to rapid economic growth as the workforce of economy will expand and they will produce more and the public will consume more so it’s a direct relationship that as production will increase consumption will increase aswell.
- Labor productivity increases with increasing growth rate, increased productivity helps the economy in the long run to a much greater extent then it hurts the labour force.
- As the productivity upsurges, so do the sum of goods and marketplaces open. Likewise, as products turn out to be less lavish, due to more well-organized manufacture techniques, the amount demanded for some of those goods also upsurges.
- Low developed countries are more benfited with high growth rates because they are more in need of it as developed countries. High economic growth help the nation to deal with many crucial problems of poverty, unjustice, basic facilities etc.
- We cannot say that economic growth is destined to bring unhappiness in fact we have to connect the potential of economic growth to make sure it really does increase the living standards of the inhabitants.
- A country which lacks productivity will have lower wages and income as compared to countries with higher productivity levels.
- High standard of living demand prosperity and for prosperity the proper system of health, care, nutrition and life expectancy must be assured. The more prosperous an economy will be the more his citizens will healthy and fit and in this way they will work for their nation more efficiently.
- We cannot say that prosperity stays stationary. As an alternative many nation’s over time become or less affluent. An economic boom may or may not bring prosperity to that country.
- Higher livings standards basically benefit majorly all the inhabitants of an economy a rapid increase in labor supply will result in labor demand aswell thus minimizing the chances of unemployment.
- High growth economy lead to high incentive so when the living standard of the population will increase people will more like to invest more because of the incentive the economy is offering and this will improve their standard of living more.
- If we take a look at the history 1950 or 1960 in USA’s rapid high growth resulted in inquality which resulted in a decrease in standard of living.
Consequently, we analysed some benefits and drawbacks of economic growth for our living standards and we can observe that there is no a particular answer to that question that whether standard of living is affected with rapid growth rate or not, but I think that economic growth hints to upsurge in living standards of the people because the high economic growth can solve the most crucial and significant problems with learning and well-being or depletion of goods, products and services and these things are far more vital than an disparity or lengthier working hours for labour and working class.
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