Economics sources, Measurement and Sustainability of Economic Growth

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11/22/2021
Economic Growth - Sources - Measurement | CFA Level 1 - AnalystPrep
https://analystprep.com/cfa-level-1-exam/economics/economic-growth-sources-measurement/
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ECONOMICS
Sources, Measurement and Sustainability of Economic Growth
12 Sep 2019
The sustainability of economic growth is measured by the rate of increase in
productive capacity and/or by the potential gross domestic product of the
economy.
Sources of Economic Growth
The growth accounting equation emphasizes the main factors that determine
growth. These include such factors as technology, capital, and labor. As a result,
this neglects other important factors such as natural resources and human
capital inputs, which also play a major role in economic growth. Therefore, we
can list the main sources of economic growth as discussed below.
Physical Capital Stock
This refers to the accumulated amount of equipment, machinery, and buildings
used to produce goods and services. Physical capital increases annually for as
long as net investments increase.
Labor Supply
The growth in the number of people available to work is an important source of
economic growth. Note that the size of the labor input can be measured by the
number of hours available for work. This is calculated as:
Aggregate Output, Prices, And Economic Growth (2022 Level I C
Aggregate Output, Prices, And Economic Growth (2022 Level I C…
…
Total hours worked = Labor force × Average hours worked per worker