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1 Introductory concepts 2  Market mechanism  3 Elasticities  4 Market structures 5  Market failures  6  Macro economic activity/eco growth  7 Inflation 8  Employment & unemployment  9  External Stability  10  Income distribution 11.Factors affecting economy  12  Fiscal/Budgetary policy  13  Monetary Policy   14 Aggregate Supply Policies  15 The Policy Mix

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The goal of strong and sustainable economic growth


Economic growth in general terms refers to an increase in the real level of production over time. Alternatively, it refers to an increase in real GDP, where GDP is the total market value of all final goods and services produced in a given time period (usually one year).  Positive economic growth will usually create employment and improve living standards via an increase in consumption of goods and services.  


The government does not set a specific 'target' rate of economic growth.  However, it does outline broader growth objectives.  In particular, budget documents have revealed that the government aims to "promote an economic climate conducive to high levels of sustainable economic and employment growth….."  The key term is 'sustainable'.  This means that the growth rate cannot be so high that it causes problems for low Inflation or external stability. In addition, it must be high enough to be consistent with the goal of full employment. The government's economic growth goal is to achieve the highest growth rate possible, consistent with strong employment growth, but without running into inflationary or external pressures. This is generally considered to be within the range of 3 - 3.5% per annum.  


Reasons for pursuing economic growth


Strong and sustainable growth is pursued primarily because it boosts material living standards as measured by real GDP per person.  Whilst the achievement of the goal can also help to increase non-material living standards (such as the boost to self-esteem from earning an income), it is the direct link to employment, income and expenditure that makes strong rates of growth a worthy pursuit.  In essence, stronger growth increases access to the goods and services that improves our material wealth and lifts living standards.






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