Effects Of Advertising On The Economic Growth Of A Nation Essay

1225 Words Oct 2nd, 2016 5 Pages
What is exactly advertising, is it only a paid promotion that aims to persuade people to act in a certain way or does it have a broader concept with the effects on the consumption rate of a nation. Advertising plays an important role in economics especially in the economic growth of a nation. According to Kaldor (1950), the economic aspects of advertisement can be approach in two different ways; either as the different effects that advertisement has on the community or in the analysis of the factors, which determine the rate of expenditure (p.1). Both have an importance in relation to the economy with similar perspectives. However, this paper is going to focus on the first approach, in the effects that advertising has in the society and how media is used as a tool of advertisement to approach the public.
To begin with, some of the effects of advertising are seen in the prices, the value of the product, consumer demand and choices, and the business cycle (MSG 2008). All of these reflect in a change in supply and demand, leading to economic growth. In relation to the effect on prices, there are some advertise products that would cost more than unadvertised but when there is more competition in one product the price tends to go down, having an effect in relation to demand. The law of demand says quantity demanded would increase as prices go down. Leading to an increase in consumption and an outward shift in the demand curve. In other words, people will buy more when they see…

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