Economic growth occurs when a country produces more goods and services through acquiring new resources or using existing resources more efficiently. The key benefits of economic growth are that it raises living standards, enlarges the tax base to fund public services, creates more jobs, and can stimulate increased trade. Economic growth depends on factors of production like natural resources, human capital, capital goods, and entrepreneurship.

1. ECONOMIC GROWTH

2. Economic growth is an
increase in the total output
of the economy. It occurs
when a society acquires
new resources or when it
learns to produce more by
using existing resources.

3. BENEFITS OF ECONOMIC GROWTH
• Economic growth raises a country’s
overall standard of living.
oThis provides people with goods and
time for enjoyable leisure activities.

4. BENEFITS OF ECONOMIC GROWTH
• Economic growth enlarges the tax
base, or the income and properties
that may be taxed.
o A larger tax base lets government
supply more public services and/or
lower taxes.

5. BENEFITS OF ECONOMIC GROWTH
• Economic growth creates jobs and
economic security for more people.

6. BENEFITS OF ECONOMIC GROWTH
• Economic growth can benefit the
economies of other countries through
increased trade.
o A successful growing economy can
be a role model for developing nations.

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FACTORS OF ECONOMIC GROWTH
Economic growth depends on the nature
of the factors of production and how well
they are used.
Factors of Economic Growth include:
o natural resources
o human capital
o capital goods
o entrepreneurship

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FACTORS OF ECONOMIC GROWTH
Natural resources are the raw materials a
country has that make life and production of
goods possible.
Natural resources affect economic
development.
Nations rich in natural resources will use
them to produce revenue.

9. 9
FACTORS OF ECONOMIC GROWTH
How valued a nation’s natural resources are
determines how much revenue they produce
and how much foreign investment they attract.

10. 10
FACTORS OF ECONOMIC GROWTH
Human capital refers to investments in the
welfare and training of workers.
An increase in human capital enables an
economy to produce more of everything that
uses human capital.
Providing health care, family benefits, and more
training and education are all investments in
human capital.

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FACTORS OF ECONOMIC GROWTH
An increase in human capital enables an
economy to produce more of everything that
uses human capital.
The more skills and education workers have,
the better they are able to work with mistakes
and to learn new jobs as technology changes.
More developed nations often invest more in
human capital than less-developed nations.

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FACTORS OF ECONOMIC GROWTH
Capital goods are goods used to produce
things. The ability to invest in capital goods
influences a country’s economic growth.
An increase in capital goods enables an
economy to produce more of everything that
uses these capital goods.

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FACTORS OF ECONOMIC GROWTH
For example, an increase in capital goods
can result in more factories, office buildings,
tractors, or high-tech medical equipment .
Producing more goods for sale in a quicker
and more efficient way leads to economic
growth and greater profit.

14. 14
FACTORS OF ECONOMIC GROWTH
Entrepreneurs are creative, original thinkers
who are willing to take risks to create new
businesses and products.
Entrepreneurs think of new ways to
combine natural, human, and capital
resources to produce goods and services
that they expect to sell for a price high
enough to cover production costs.

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FACTORS OF ECONOMIC GROWTH
Entrepreneurs risk their money to produce
new goods and services in the hope of making
a profit.
If a new product or service does not become
popular, the entrepreneur may not make a
profit. This is the risk he or she takes.
Economic growth depends on entrepreneurs
willing to take chances and introduce new
ideas.