Economic growth is an increase in real GDP. Economic growth could raise living standards and reduce poverty by increasing job opportunities and by increasing the amount of tax revenue the government has spend on helping people who are unable to work. There are two main sides of factors that cause economic growth, which are supply side and demand side.
The demand side factors influence the growth of aggregate demand, the first factor that affect aggregate demand is the interest rate. Lower interest can encourage business invest more and customer to spend more. The second factor is consumer confidence, if consumers are confidence about future, they might encouraged borrow and spend. The value of exchange rate is important as well, because if the currency in the country has devalued, import might be more expensive and export might become more competitive. This can increase the demand of domestic goods and services. Furthermore, if the house price increased, people's asset value has increased. Therefore, people might be encouraged to spend more money. Also, if the population of the country has grow, the greater population, the bigger the economy becomes.
The long run aggregate supply can be influenced by the levels of infrastructure, without necessary infrastructure it could be hard for businesses to be competitive. Also, the labour capital, which is the productivity of the workers, by increase the labour productivity can help the businesses become more efficient, productivity refers to how much GDP the work force generates. To increase the productivity of the workers, the government and businesses might have to think of the better educated and healthier workforce. Moreover, the development of technology can