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32 minutes ago, inriya said:

How can economic growth be link up to the reduction of unemployment and equal distribution of income? 

Reduction of unemployment:

Economic growth means more industries means more jobs

also, MNCs invest

 

Fair income:

progressive taxes

Government projects

 

Just a brief outline.

Cheers

King112

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22 minutes ago, King112 said:

Reduction of unemployment:

Economic growth means more industries means more jobs

also, MNCs invest

 

Fair income:

progressive taxes

Government projects

 

Just a brief outline.

Cheers

King112

I saw this in a past paper, with unclear marking scheme, and it goes to macroeconomic section. I find it weird when it asks us to "discuss" whether economic growth leads to reduction of unemployment and therefore fairer distribution of income due to higher employment.

I understand that economic growth leads to lower unemployment (I tried Philips Curve by also tying it up with inflation due to demand-side policy, though unnecessary) and therefore increase in equality of income. But by the term of "discuss " there must be an aspect of economic growth not leading to unemployment and equal distribution of income. (?)

Thank you so much btw

Edited by inriya

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8 minutes ago, inriya said:

I saw this in a past paper, with unclear marking scheme, and it goes to macroeconomic section. I find it weird when it asks us to "discuss" whether economic growth leads to reduction of unemployment and therefore fairer distribution of income due to higher employment.

I understand that economic growth leads to lower unemployment (I tried Philips Curve by also tying it up with inflation due to demand-side policy, though unnecessary) and therefore increase in equality of income. But by the term of "discuss " there must be an aspect of economic growth not leading to unemployment and equal distribution of income. (?)

Thank you so much btw

Can you give me the exact wording of the question? I should be able to help more then.

Cheers

King112

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6 minutes ago, King112 said:

Can you give me the exact wording of the question? I should be able to help more then.

Cheers

King112

Discuss the view that economic growth can always lead to a fairer distribution of income and lowering of unemployment rate. 

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And oh my god, I just figure everything out of how economic growth can lead to increase in unemployment and therefore unfair distribution of income. (The irony, isn't it.) 

Economic growth just means the increase of real GDP over a period of time, so it does not limit to only AD or AS increase, it can be both at the same time. If the extent of AS increase is greater than AD increase, which in case, China had this problem before a few years ago due to its huge power of productivity, the increase in AS will meet insufficient aggregated demand of the economy. Therefore, firms may have to lay off workers to reduce costs so they can maintain their levels of outputs, so unemployment rate will increase which leads to unequal distribution of income. 

Edited by inriya

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