Question

1. If you were in a position to run our economy, what steps would you take to raise our rate of economic growth? 2. Give an example of an opportunity cost for an individual an a nation. 3. Would it be harder for a nation to attain full employment or full production? Explain. 4. What is the opportunity cost you incurred by going to college? 5. Why is scarcity central to economics? 6. Can you think of any decisions you may have recently made that incurred opportunity cost? 7. Why is entrepreneurship central to every business firm?

Answer 1

Rising rate of economic growth signifies that the production as well as consumotion capacity of the economy is increasing. This also signifies that GDP growth rate is increasing as well. The rate of economic growth can be increased by ;

1. Increasing Aggregate demand (AD)

2. Increasing Aggregate supply (AS)

Steps to be taken to increase economic growth rate;

1. Lowering rate of interest in the economy will increase the capital available for buisness and firms thus will boost investment in the nation. Reduced rate of interest will also increase consumer spendings.

2. Labor market reforms including better investment policies will also boost investment.. Increase in wages will increase the spending power thus leading to increase in aggregate demand in the economy increasing GDP.

3. Adoption of advanced production techniques which are more efficient and effective will also lead to increase in the production capacity thus increasing aggregate supply.

4 Fiscal policy reforms incuding tax breaks and tax cuts to individual will also increase the disposable income thus improving consumer spending thus increasing GDP..