Economic development and growth - Basics of market-based growth
3 important questions on Economic development and growth - Basics of market-based growth
The process of economic development refers to:
Processes of reorganization in poorer societies (often called developing countries) that create the conditions for sustained economic growth. In wealthier developed countries, we see the economic challenge as maintaining growth.
Many people today argue for focusing not only on economic growth, but on broader measures of human development, this is:
A concept that sets wealth as one criterion alongside others like health and education as measures of social progress.
A common problem in economic growth is the trade-off between unemployment and inflation, known as the Philips Curve, because:
- Unemployment
- Common policy remedies: economic stimulus; fiscal policy (taxes/government spending) or monetary policy (interest rates) to 'prime the pump' of the economy.
- Possible trade-offs: high government spending or low interest rates may eventually cause inflation.
- Inflation
- Common policy remedies: austerity policies: cut government spending or raise interest rates to make money more scarce thus more valuable.
- Possible trade-offs: unemployment through cutbacks
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