Economic Growth said to be necessary but not sufficient condition to eradicate absolute poverty and reduce in equality. What is the reason behind this argument?
-Economic growth is the increase in the level of potential output in the economy over a period of time. We have reached a point where economic growth is no longer improving people’s lives.
Economic growth may be essential to enable higher incomes for people to be able to buy more food. However, economic growth doesn’t necessarily improve everyone’s living standards. Economic growth could bypass the poorest sections of society because they don’t have the ability to take part. According to economicshelp.org economic growth may result inflation effect. If aggregate demand increases faster than the increases in aggregate supply, then there will be an excess demand but a shortage in supply in the economy. Hence, producers will tend to increase the price and this situation is known as inflation. For this kind of event, poor people will not be sustaining their basic needs and only the rich people will eventually buy the said high product because they can afford them.