26. Discuss the sources of economic growth in Australia and analyze government policies to achieve sustainable economic growth
Economic Growth refers to an increase in a country's productive capacity as measured by changes in real GDP (over time) (Usually a year). It allows countries to raise per capita income levels and also the standard of living through increases in real GDP. Sources of economic growth usually include increases in the quantity and productivity of new and existing resources. This leads to other sources of economic growth, including the major components of aggregate Demand (consumption. Investment, net government spending and net exports). Technological change is also an important driver of economic growth as it improves labour and capital productivity, helping existing resources to be utilized efficiently. The Government uses a number of macroeconomic and microeconomic policies to promote and sustain economic growth, in the short, medium and long term.
The main sources of economic growth include increases in the quantity of resources being used for production and the increasing productivity of existing resource use.
This allows for increases in real GDP over time, as resources are able to output more goods as they are more efficient and effective. These sources enable greater national output, material welfare and living standards.
Other Sources of economic growth include the major components of aggregate demand, being denoted by consumption (C0, investment (I), net government spending (G) and net exports (X-M) (GDP= C+I+G+(X-M). The sources include:
* (Accounts for 60%)Consumption spending by households which adds to aggregate demand, causing production to increase
* (21%)Investment on new capital goods and technology also adds to aggregate demand and causes production to increase
* (22%)Net G Spending adds to aggregate demand causing production to increase
* (Recorded surpluses in a number of years)Net Exports (X-M) if...