A Free Market’s Development Essay

1367 Words 6 Pages
The twentieth century ran by a mainly Keynesian system with a modern mix economy, but now its time for a change. A free market would lead to more establishments of new businesses. In addition, a free market would allow individuals to be compensated based on skills, education and experience. Lastly, the free market economic system would lower the unemployment rate. The development of a complete free market system will lead to the growth of the gross domestic product.

The development of a complete free market would strengthen the GDP as the country has a growth in the amount of new businesses established. Entrepreneurs would be more motivated to create a business if there were no restrictions. They could produce what they want, however
…show more content…
This freedom would attract more entrepreneurs to follow their dreams and establish their goods and/or services into society. Entrepreneurs would take more risk in a free market because they would have less expenses thus higher profit. The establishment of more businesses would boost the GDP because new businesses mean more jobs. With more individuals contributing to the economy and people having larger sums of discretionary incomes, people are likely to spend the extra money or save. Spending the extra money would be The Wealth Effect. When people have larger incomes, they will buy more, thus spending into the economy, with will strengthen the country gross domestic product. If people choose to save their money and keep in their bank accounts, then that would relate to The Interest Rate Effect. The interest rate affect basically states that when you save more, banks have more to lend to borrowers, thus the interest rate will go down. With a lower interest rate people will be likely to borrow more from bank for investments. With larger investments made, the economy grows. Therefore the GDP will become stronger. New businesses will be established through the development of a complete free market, which will create a stronger GDP.

In addition,

Related Documents