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GDP growth is influenced by factors such as affordable economic resources, high labor output and wages, and consumer and business confidence. Freedom and private property protection are important for economic success, and the government must ensure resource availability. High wages and productivity increase demand and supply, while consumer and business confidence drive growth.
A nation’s growing domestic product (GDP) represents the economic market values for the goods and services that firms produce. GDP growth occurs when a country allows its private sector to operate in a largely unregulated manner. Specific factors affecting GDP growth include widely available economic resources at affordable prices, high labor output and wages, and strong consumer and business confidence. In many cases, all of these factors occur differently in each country; other times, several factors may play a role. Therefore, growth is not something every nation experiences at the same time or through the same factors.
Freedom and the ability to collect and protect private property are among the most important foundations of a nation’s economy. These two factors must be present as they encourage individual citizens to reach for heaven and make every attempt to increase their personal livelihoods. Through these two factors, a company naturally experiences GDP growth as each individual’s self-interest takes over. It is up to the government of a country to ensure the available resources and the protection of private property. Without extensive protections, a country cannot ensure the economic success of its people.
Economic resources are the physical elements that people and businesses need to produce goods and services. These items must be readily available within the country or through commerce. An affordable and resource-maximizing price point is often necessary to experience solid GDP growth. Competition for these resources can also help ensure GDP growth. As companies try to get more resources than others, growth occurs due to more supply in the market.
High wages and productive productivity are also necessary for a nation to experience GDP growth. High wages indicate that a company is able to secure enough profits to pay employees well for their work. These wages then enter the market as individuals buy more goods, increasing demand and increasing supply. Wages affect productivity as companies look for methods that enable economical production to increase output. The result is cheap goods that employees can help produce in large quantities.
Consumer and business confidence represents the belief these parties have in the current economy. In most free-market economies, consumers can make up a large part of GDP growth. High consumer confidence indicates buyers who are willing to spend money on various cheap goods. The same goes for business confidence. Secure businesses seek to increase production and meet potentially higher consumer demand for goods and services.
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