Constraints on Economic Growth in an Economy??? (1 Viewer)

[school4nerds]

Hey what are some constraints on economic grwoth in an economy?

is it just stuff like decreased consumption levels, government spending and investment and trade deficits etc?? or is there more?

 

[kwu1]

The factors you listed were mainly aggregate demands factors. Maybe some other supply factors may include: infrastructural bottlenecks (refer to Tim Dixon textbook), capacity constraints. If necessary, there is even the Current account deficit (public debt levels and keeping it at a sustainable level) but to be honest that isn't a real issue to worried about. That's all I can think of at the top of my head ATM.

 

[Myans]

Go to your Economic Objectives section of your textbook. It will provide you with "conflicts" in the policy mix i.e Economic Growth vs _______. These are the constraints e.g Price Stability (inflation), External Stability (CAD/NFL), Environmental Sustainability, etc

 

[kwu1]

Go to your Economic Objectives section of your textbook. It will provide you with "conflicts" in the policy mix i.e Economic Growth vs _______. These are the constraints e.g Price Stability (inflation), External Stability (CAD/NFL), Environmental Sustainability, etc

I agree. There are so many answers this Q. Have a look at this.

 

[clarg]

Growth constraints are issues that arise from increased EG, i.e.:

-Higher inflation (RBA wants to keep it between 2-3%, EG raises CPI)
-Environmental sustainability issues
-External stability problems (higher CAD)
-Distribution of income and wealth (less equal as EG rises)

Also capacity constraints, as EG cannot rise beyond the PPF, due to EG measuring supply.