Furthermore, another way of increasing capital, is through more machinery and equipment, which then increases a country's productive potential. This will lead to higher rates of investment, as there will be more machines for the labor force to work on.The labor force is another clear ingredient, as the more time people spend time working in the market, the more goods and services are likely to be produced. In addition, technological improvements add to economic growth in the same way that increases in the capital stock do: by increasing worker productivity. By having updated capital equipment to use, workers can produce more per hour or day. For example, the invention of the computer has significantly increased worker productivity. .
Following on, human capital is an important factor for increasing economic growth of a country, as the education and training of a population is an important factor in the aggregate production function. The better trained and educated the population, the more goods they are able to produce overall. This is why economists treat the education level of a population to show the economy's human capital. This links in with the quality of the enterprise resource as education provides more entrepreneurial managers, which would lead to more innovations and inventions.
Finally, Lower interest rates in the short term can lead to more economic growth as lower interest rates would make borrowing less expensive and will encourage firms to invest and consumers to spend, increasing the confidence of the labor force. People with mortgages will have lower monthly mortgage payments and thus more disposable income to spend.
Production possibilities Curves demonstrate how economic growth can reduce scarcity.
We can increase our ability to produce goods and services, or increase our potential GDP if we get more resources, or better resources and better technology. Since this increase maximum output that we are able to produce it shifts the production possibilities curve outward.
