What Are the Characteristics of Modern Economic Growth?
Although it may seem as if the changes in the economy are sudden, there are characteristics economists use to forecast impending changes and modern economic growth. The primary characteristics of economic growth are increases in gross domestic product (GDP) and retail sales. The status of these indicators can help shape public policy and, in a weak economic period, many of the policies will usually be aimed at increasing the flow and exchange of money.
Modern economic growth results in an increase of the production and consumption of goods and services. The economy is constantly changing, and both contraction and expansion are normal. As the economy experiences growth, most people have access to more money; the more money that is spent and consumed, the more the economy grows.
In addition to the public benefit of economic growth, there is a benefit for businesses in an increase in an output of resources. During economic expansion, more resources are consumed and businesses typically experience profitable periods. Additionally, with more profits, businesses may be able to find innovative ways to more efficiently use resources.
An indicator of growth of the economy is almost always measured by a change in the gross domestic product. During a period of modern economic growth, the GDP is used to determine the total market value of everything produced and sold within a calendar year. To determine the change in GDP, the amount of goods produced is compared to consumer, government, and investment spending.
Modern economic growth cannot really be examined without acknowledging the barriers to the growth of the economy. If resources are not being produced and consumed efficiently, growth can be stifled. There are factors of production that are considered when looking for economic efficiency: land, capital, labor, and enterprise. If any of these factors suffers from a lack of accessibility, availability, or quality, economic growth could be negatively impacted.
It is common for individuals to spend more when the price of goods falls or if income increases. The retail spending that occurs during modern economic growth provides valuable information to economists. Not only do economists look at the amount of spending, the products and services that are purchased are also examined.
Retail sales are closely watched and the value of merchandise sold is tracked. The amount products and services purchased and consumed can result in price changes. If the economy is in a period of contraction, consumers will look for lower priced goods; during times of modern economic growth and expansion, consumers may select a higher priced good if that good is identified as providing more value for the cost.
@Vinzenzo -- it's not as bad as all that. Sure, a lot of American companies are outsourcing labor but keep in mind that a lot of foreign companies (particularly auto manufacturers) are setting up plants in the United States and are providing those jobs that American companies are shipping overseas.
Why? That's a complicated issue that involves everything from union pressure to politics.
And what has been weighing down the United States economy since the 1980s? The gradual loss of our manufacturing base to other nations. Manufacturing doesn't just provide jobs. Look at any manufacturing plant and you will see other businesses spring up to manufacture and supply items to the plant, thus creating more jobs.
Putting a manufacturing plant in an area is kind of like throwing a rock in a pond -- more jobs, homes sales to area workers, more revenue for restaurants and retailers, increased taxes and all kinds of good things happen. Throwing that rock in a foreign pond causes those positive ripples in another country.
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