Essay about Main Sources Of Economic Growth

1123 Words Jun 15th, 2016 5 Pages
Analyze the main sources of economic growth in the Australian economy and the policies the Australian government can use to achieve a higher sustainable rate of economic growth.

Economic growth is considered to be an increase in the volume of goods and services that an economy produces over a period of time. It is calculated through the change in real GDP over a certain time period. The main sources of economic growth are the changes in aggregate demand and supply, which encompass various factors, which influence the levels of economic growth in both short and long term periods. The Australian government also applies a range of policies in order to sustain a high level of economic growth in order to allow national wealth to increase and to experience a high standard of living.

Aggregate demand is the total level of expenditure in an economy over a given period of time and is the source of mainly short to medium term changes in the level of economic growth. The components of aggregate demand include consumption, investment, government spending and taxation and exports and imports. Income is an important factor that influences the level of consumption by individuals; if there are higher levels of disposable income, consumers will be willing to spend and consume more. Therefore, if there are speculations about a rise or a fall in prices of goods and about the accessibility of the good, this will guide consumers of whether to spend or save. Changing levels of interest rates…

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