Essay on The Effect Of Gdp Growth On Economies

1966 Words Mar 7th, 2015 8 Pages
The cause and effect of GDP growth in economies varies as a result of the consumption of many factors include government, population, HDI, unemployment and the circular flow of income. Each aspect of the economy will affect the GDP growth positively or negatively which will eventually result in stability of different economies.
The government plays an important role in the economy. By implementing subsidies, cutting taxes, introducing welfare programs, funding education and providing merit goods, the Australian government causes a GDP growth.
In order to encourage investors to start running a business, the government gives a certain value of money. This effects the GDP growth positively, as the forming of another business results with increased competition and increased production of goods and services. Similarly, the Swiss government offers subsidies to encourage local producers and businesses to expand their position within the world economy by expanding their market overseas and allowing to sell worldwide.
Tax cuts are also involved in the GDP growth of both economies. By cutting taxes, individuals have more disposable income and businesses keep their earnings. The effects on the GDP is depending on how individuals and businesses are going to spend the resources. If households buy more goods and businesses increase hiring and capital equipment purchases, the GDP will increase. However, a reduction in taxes also means less revenue for the government at all levels, which…

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