Discuss the Costs and Benefits of Economic Growth

Discuss the Costs and Benefits of Economic Growth
Economic growth is when there is an increase in national output and national input, due to a rise in aggregate supply and aggregate demand. There are two types of economic growth, long-run and short run. Short run economic growth is when there is an increase in actual gross domestic product (GDP) and long run economic growth is when the productive capacity of an economy expands. Long run economic growth can come as a result of increased capital, for example machines or factories, increased working population, via immigration, or through increased labour productivity. Economic growth can bring about many changes, both good and bad, and these changes affect the people inside that economy in many ways. In this essay I will be outlining the main costs and benefits that are a result of economic growth, and evaluating which side outweighs the other.
In the United Kingdom, the government’s aim in regards to economic growth is to raise the rate of sustainable growth and achieve rising prosperity through creating economic opportunities for all. The Chancellor of the Exchequer aims to achieve this by maintaining a stable macroeconomic framework with low inflation, improving the quality and cost effectiveness of public services and maintaining sound public finances in accordance with the Code for Fiscal Stability
One way in which economic growth is desirable is that it may lead to an increase in the number and quality of public services. Due to the growth of the economy, people will be earning more income as wages will be higher, as companies will be generating more revenue and can afford to pay their employees more. This will then lead to increased tax returns, both from the companies and the employees, and therefore more money into the government’s account. This means that the government can spend more money on improving public services without increasing the percentage tax rate on individuals or companies, and can...