This dissertation discusses the neoclassical growth theory and economic growth indicators. The neoclassical theory explains the trend in economic growth using various factors. These factors are capital-labor and technology. Therefore, the three factors significantly impact economic changes. It states that short-term equilibrium varies capital and labor levels in the production sector. Moreover, technological advancement is crucial for the continuity of economic growth. On the contrary, according to the theory, long-term and temporary equilibrium does not require the three factors. The theory also states that capital accumulation and good use of the capital leads to economic growth. Therefore, balancing the factors is crucial for a country to realize the benefits of economic growth.
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THE INDICATORS OF ECONOMIC GROWTH
The state of the economy is a significant determinant of the stock market. A stronger economy encourages more trading activities in the stock market as compared to a weaker economy. There are various economic growth indicators, including the following. Firstly, high employment shows represent increased economic growth. This results from the fact that the gross domestic product increment in the process of increasing employment. Secondly, stable inflation rates indicate that economy is on the right track to growth. Thirdly, rising interest rates are a sign of economic recovery. The application of neoclassical growth theory is proper for monitoring economic growth. This is because it incorporates major factors essential for improving the economy.
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THE BENEFITS OF ECONOMIC GROWTH
An increase in the gross domestic product(GDP) denotes a developing economy. The GDP incorporates national input income and expenditure. The following are the benefits of economic growth. Firstly, the rise of the average income of citizens, therefore increasing their standards of living. Secondly, it increases employment rates, which reduces the number of crimes and homeless people. Thirdly, it leads to higher taxes, which increases government revenue. As a result, leading to reduced government borrowing. Fourthly, it leads to better public services due to higher government expenditure on such services. Therefore, the analysis and monitoring of economic growth indicators are essential for improving the general economic state.
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