Economic Growth

• The standard of living refers to the amount of goods and services consumed by households in one year.
• Standard of living = real national income/population
• Things that effect SRAS: Interest rates, fiscal policy, commodity prices, exchange rates, confidence of businesses and households.
• Things which effect LRAS: Investment, productivity, labour supply, research, enterprise.
• Benefits of growth: Higher standard of living, fiscal dividends which raise tax revenues to spend on welfare benefits such as healthcare, higher employment.
• Negatives of growth: Risk of inflation, environmental effects, increases inequality.
• Growth sees households gain rising incomes over time giving them more purchasing power.
• Growth sees government revenue rise due to higher incomes which generate more tax.